Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

COMMITTEE OF SELECTION

Ordered,

That Mr. Fraser Kemp and Mr. Ian Davidson be discharged from the Committee of Selection and Ms Karen Buck and Mr. Philip Hope be added to the Committee.—[Mr. Pope.]

Oral Answers to Questions — TRADE AND INDUSTRY

The Secretary of State for Trade and Industry was asked—

Oral Answers to Questions — Post Office (Social Security Benefits)

Mr. Steve Webb: What assessment he has made of the contribution to Post Office revenues derived from handling over-the-counter payments of social security benefits. [61292]

The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): Details of the contractual relationship between the Benefits Agency and Post Office Counters Ltd. are commercially confidential. However, work carried out by Post Office Counters Ltd. on behalf of the Benefits Agency represents very broadly one third of all transactions carried out by the business, and a roughly similar proportion of its income.

Mr. Webb: I am grateful to the Minister for that answer, which demonstrates how important benefits payments are to the Post Office's business, yet the Government are pressing more and more people to receive their benefits through bank accounts. The working families tax credit will be paid through pay packets, not over the post office counter. What assurance can the Minister give to the postmistresses and postmasters in rural villages in my constituency that that key element of their business will not be steadily eroded through Government policy?

Mr. McCartney: The Government are committed to a national network of post offices. As the hon. Gentleman knows, because I have said many times from the Dispatch Box, we are also committed to promoting the development of those small businesses, alongside the capacity of the Post Office to deliver services on behalf of the Government. We want the network of post offices to be maintained on the basis of their increased capacity to do other types of work, in addition to delivering

traditional services. The Government's review of the Post Office is critical because it will underpin that commitment.

Mr. Alan Johnson: Although I support the work of my right hon. and hon. Friends in their review of the Post Office, and appreciate why the option of share sales must be included in a comprehensive review, is my hon. Friend aware of the deep disquiet felt on these Benches and in other parts of the House about share sales, and our concern that we do not go down that railtrack? Will he confirm that there is no earthly reason why a publicly owned Post Office cannot compete successfully against European postal administrations that have enjoyed the same commercial and financial freedoms for many years?

Mr. McCartney: First, the Government are totally committed to the Post Office remaining in the public sector. Privatisation went out the door when the previous Government were kicked out by the British people. Secondly, for the Post Office to develop on an international and global basis, it needs commercial freedom, commercial discipline and resources to do that job. That is the purpose of the review. It will ensure a sound financial and commercial framework, so that the Post Office can move forward to become a major player in the global postal and telecommunications markets.

Mr. Edward Garnier: The Minister may not know that I wrote to his right hon. Friend the Secretary of State about 10 days ago to ask what progress was being made in the Department with regard to the decision to introduce or not to introduce computerised swipe cards for the transaction of Benefits Agency business through sub-post offices and post offices. Can the Minister tell me whether his Department has made a decision on the matter?

Mr. McCartney: Since the election, the Department and the Government as a whole have been developing a strategy to eliminate financial and social exclusion. We are trying to ensure that we get the resources which, over time, will allow us to provide social banking and a cost-effective and fraud-resistant means of paying benefits. We will ensure that information technology systems are put in place in the post office network to do that job for customers of the Post Office. We have cleared up the mess left by the previous Government in relation to those matters.

Oral Answers to Questions — Energy White Paper

Mr. James Gray: If he will make a statement about the impact on electricity prices of the measures announced in the Government's energy White Paper. [61293]

The Minister for Energy and Industry (Mr. John Battle): As we set out in the White Paper, "The Review of Energy Sources for Power Generation", that was published in October, the existing distortions in the electricity market make prices higher than they should be. We consider that as the market is refornied, wholesale price falls of at least 10 per cent. in real terms and possibly more can be expected in the medium term. That,


of course, cannot be a guarantee, as the Government do not have power to set prices in open and competitive markets.

Mr. Gray: Is the Minister aware that electricity prices fell consistently from privatisation onwards? Whereas gas-fired electricity cost 2.5p per kWh, coal-fired electricity cost 4p per kWh. Is he not concerned that his ending of the dash for gas on behalf of his friends in the trades unions will result in higher electricity prices, as well as greater environmental damage?

Mr. Battle: The answer is no. We are working to reform a totally flawed wholesale market structure set up by the hon. Gentleman's party in government. I recall that it was my predecessor as Energy Minister, the noble Lord Fraser of Carmyllie, who was responsible. I am tempted to say that to lose one leader of the Lords is unfortunate, as the great wit would put it, but to lose two in a day seems downright incompetent. However, the entire country now realises that that lot opposite are not capable even of joined-up opposition.

Mr. Bill O'Brien: I thank my hon. Friend for his reply, which demonstrates the Government's fair approach to the concerns of many of my constituents about employment in the electricity-generating industry and in the mining industry. I challenge the figures given by the hon. Member for North Wiltshire (Mr. Gray) for the price of electricity generated from coal. There are examples of it being much cheaper than gas, and I hope that my hon. Friend will ensure that that pressure on the gas-generating industry to reduce its prices continues, so that we can have the benefit of the full generating of electricity from coal.

Mr. Battle: I am grateful to my hon. Friend, who has championed a fair market in power generation throughout his time as a Member of the House. That is what the review was about. It is up to the coal industry to make its output commercially attractive to generators, but there was not a level playing field for coal to compete in that flawed market. That is the whole point, and why we will keep up the pressure to ensure that the pool is properly reformed and there is a level playing field on which one fuel is not unfairly stacked against another.

Mr. Ian Bruce: But the Department of Trade and industry decided that it would reform the pool price—surely the Minister has left the market wondering what is going on. Cannot we have some decisions from the Government, rather than yet another bit of consultation and another hit of spinning? Clearly the energy industry wants to know what will happen with the pool, and any reform—which would be welcome, if it brought down the price of electricity to consumers—should be carried out now.

Mr. Battle: The energy industry asked us to work at reforming the flawed structure of the pool. For example, it pressed for a challenge to the dominance within the pool of two major generators. What have we done'? We have taken action and suggested that power companies divest plant: PowerGen has agreed to divest 4 Gw of plant and National Power is looking at divestment opportunities. We have taken action—[Interruption.] That is within the

pool, if the hon. Member for South Dorset (Mr. Bruce) does not understand the pool. The power stations come on line to sell their energy, but they are being dominated by one or two generators. We are tackling that, and sorting it out now. We are not hanging about; we are mopping up the mess that we were left by the Conservative Government.

Mr. Roy Beggs: Does the Minister agree that all those involved in generating electricity have responsibility to be more efficient and to ensure that electricity is produced at the cheapest possible price? Will he join me in congratulating NIGEN in Northern Ireland, which is introducing proposals to reduce electricity costs, in co-operation with the regulator'?

Mr. Battle: Yes. Those Conservative Members who seem to think that prices are going up should consider time-weighted pool prices in the period from April to November when prices were about 1 per cent. lower than in the same period last year. Of course summer and winter prices cannot be compared, so we should look at the winter period. There has been a 3 per cent. fall in real terms in prices, and we hope that that will continue. We think that there is space for that to happen—through working with the regulators, as the hon. Gentleman suggested.

Mr. Denis MacShane: But is my hon. Friend the Minister aware of the great damage being done to the steel industry by the warped system of electricity prices inherited from the previous Government? Is he aware that the increase in prices charged to the steel industry allowed by the regulator are higher than the windfall tax paid to the Treasury by the electricity industry? The steel industry cannot wait until 2000, 2001 or 2002 for the review. Will he look urgently at what can be done now to allow our steel companies to have energy prices at a European level, not the high Tory prices that we inherited?

Mr. Battle: I share my hon. Friend's concern. Electricity contracts are financial contracts, often outside the pool. It depends what contracts the companies have, but there is concern in the steel industry about rising energy and electricity prices. In the new trading arrangements, we will change the relationship between the generators and their customers.
I have asked the Director General of Electricity Supply, who is responsible for prices, to keep a close eye on progress as it affects heavy industry to ensure that our industry is not priced out during the restructuring of the pool. In the light of my hon. Friend's question, I shall ask the Director General for a progress report on his views.

Oral Answers to Questions — Indonesia

Mr. Robert N. Wareing: If he will make a statement on trade between the United Kingdom and Indonesia. [61294]

The Minister for Trade (Mr. Brian Wilson): Indonesia was the United Kingdom's 37th largest export market in 1997, with exports totalling £701 million. This year has seen a 50 per cent. decrease in year-on-year exports to the end of September, whereas imports from Indonesia have remained steady at £740 million.
In the short term, Indonesia faces a period of economic and political uncertainty. In the longer term, the pace of economic recovery depends on the Indonesian Government's management of political change and its continued implementation of the International Monetary Fund reform programme.

Mr. Wareing: I thank my hon. Friend for his answer, which gives some comfort. Last year, £118 million-worth of transport equipment was exported to Indonesia. Similar contracts have probably been implemented this year. Will my hon. Friend take steps to ensure that none of that equipment is used for the suppression of the Indonesian people, or for Indonesia's genocidal campaign in East Timor?

Mr. Wilson: My hon. Friend's concerns are understandable. I assure him that, in the past, we have taken up with the Indonesian Government our concerns about the use of British-supplied equipment. It is the Government's policy that no equipment should be exported that would be used as my hon. Friend described. Every application for export licences to Indonesia is measured against that criterion.

Oral Answers to Questions — Worker Rights

Mr. Robert Syms: Whom the Government plans to consult on the extension of trade union and worker rights. [61295]

Ms Claire Ward: If he will make a statement on the progress on implementing his fairness at work policies. [61300]

The Secretary of State for Trade and Industry (Mr. Peter Mandelson): We have been consulting a range of organisations that wish to offer views on fairness at work policies. As stated in the Queen's Speech, the Government will be bringing forward legislative measures in this parliamentary Session.

Mr. Syms: Will the Secretary of State publish those consultations, so that we all know the thinking of the Government and the trade unions on this matter? There is great concern that any extension of rights will increase the costs to industry, which will have a knock-on effect for employment. Dorset has already had some bad news today from GEC. The Marconi communications group is to lose 1,000 jobs, including many from the Wallisdown road site, which will affect many of my constituents in Poole and others in Bournemouth. Costs to industry are of great concern, especially given the current state of manufacturing in Britain.

Mr. Mandelson: I have put a list of the more than 470 organisations that have submitted responses to the White Paper in the Library. I suggest that the hon. Gentleman contacts those organisations. When people submit their views to the Government, they do so in confidence. We listed those who have submitted their observations, and it is up to the hon. Gentleman to contact them. It is for them to let him have the information if they so wish.

Ms Ward: Does my right hon. Friend agree that the principles of fairness at work should apply to all

employees, including health service workers? Will he make clear his position on the application of the 40-hour rule to health service workers?

Mr. Mandelson: I agree with my hon. Friend. The central objective is to support a new culture of partnership and co-operation at work, whether in the private or the public sector. That is what I want to see. I have been greatly encouraged by the responses to the "Fairness at Work" White Paper, many of which have been very supportive of the Government's proposals. It is important that people in the public and private sectors, including the national health service, feel encouraged by the Government's proposals. They will help create partnership at work and a committed work force, whether in private firms and companies or in public services such as the national health service.

Mr. Geoffrey Clifton-Brown: The hon. Member for Watford (Ms Ward) may have been referring to a report in The Times today, which states that the European Union may overrule the Secretary of State on the 48-hour week for junior doctors and thousands of workers in the haulage industry. Will the Secretary of State confirm whether that is so? If it is, is it not a direct result of the fact that the Government, immediately they were elected, acceded to the social chapter? We are not able to veto these proposals, because they can be accepted by qualified majority voting. These measures will be imposed on this country whether we like it or not.

Mr. Mandelson: It was not the present Government who signed the working-time directive; it was the Government of whom the hon. Gentleman was a member.
The hon. Gentleman says that the European Commission is seeking to overrule me. I do not know on what it can overrule me, as I have yet to reach a final view as a result of our current discussions with the Commission about the extension of the directive to other sectors, including junior doctors and the road haulage industry.
My view is well known. I believe that the position must be examined on a case-by-case basis. It is important for us not to create either unacceptable inflexibility in the working practices of junior doctors, or unacceptable costs to the national health service. It is with both those considerations in mind that the Government will proceed with their discussions with the Commission.

Mr. Martin O'Neill: Labour Members are pleased that my right hon. Friend is using expressions such as "the promotion of social partnership", and is trying to inculcate a spirit of co-operation in industrial relations. Has he received any representations from Members of the other House about proposals relating to unfair and, in particular, constructive dismissal?

Mr. Mandelson: I do not know whether there will be a right of appeal for Members of the other place under our legislation. I am sure that someone somewhere in the Commission in Brussels will be prepared to hear such an appeal if the person concerned wishes to make it—but if he wants a friend during the disciplinary proceedings, I can think of no one better than my hon. Friend the Minister of State to come to his aid, and to hold his hand when he is next summoned to the headmaster's study.

Mr. Tim Boswell: Has the Secretary of State not observed that, during the last month, four of the five national broadsheets—The Guardian, characteristically and perhaps significantly, dissenting—have carried stories suggesting that he intends to perform what is described as either a U-turn or a climbdown in regard to powers for the unions? Will the right hon. Gentleman now tell the House specifically—no spin, honest—whether he intends to impose a moratorium, or cooling-off period, if he prefers, on trade union membership, in order to meet the automatic recognition criteria?
Would the right hon. Gentleman be content to go down in history—if I may slightly modify a deplorable ditty—as the man, the very smooth man, what waters the workers' rights?

Mr. Mandelson: I am sure that there are many competing issues in regard to which I may go down in history.
We are considering all the points that have been made to us in the consultation that we have undertaken following the publication of the White Paper, including a number of points made by employers' organisations. Some of those points are reasonable; others are not. Some are workable; others are not. I am confident that we will produce a Bill which, while not pleasing every single person in every respect, will be legislation with which everyone can live. It is important for a basis of consensus among both unions and employers to underpin legislation that will have serious practical effects and a considerable impact on people at work. Given its ramifications, it is right for us to spend as much time as we need to get that legislation right.
The Bill will strike a balance. It will be true to its principles and aims, but acceptable to all in its application.

Oral Answers to Questions — Manufacturing Industry

Mr. Nigel Griffiths: What steps his Department has taken to create a stable economic climate for manufacturing industry. [61296]

The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche): The Government have established new frameworks for monetary and fiscal policy to ensure a platform for long-term economic stability and growth. My right hon. Friend the Secretary of State will shortly be publishing a White Paper, which will include a series of measures to promote the competitiveness of UK industry.

Mr. Griffiths: While the whole country welcomes what the Government are doing to create economic stability, is all that not being undermined by the Conservative party questioning and challenging and talking down British business—questioning the independence of the Bank of England, challenging the new deal and the working families tax credit—and by the chaos that the Conservative party has created in the House of Lords by sacking Viscount Cranborne and the resignation of Peter Fraser?

Mrs. Roche: I agree with my hon. Friend. The previous Government were prepared to sacrifice the economy's long-term health for short-term political gain. I also agree that, despite the present difficulties in the world economy, the tough and decisive action that this Government have taken means that Britain is well placed to steer a course for stability and growth. It is about time that Conservative Members stopped talking down the British economy and started to support British business.

Mr. David Chidgey: Listening to that response from the Minister with responsibility for small business, I am sure that she will be pleased to know that a firm called Carbospar in my constituency has just been awarded millennium project status. It is its response to the Prime Minister's challenge to show that Britain is a creative powerhouse, but I hope that she will be appalled to learn that that same firm has lost 50 per cent. of its projected overseas sales as a direct result of high interest rates and the unstable value of the pound. It is clear that winning shiny plaques is no substitute for winning orders and keeping jobs, so will she take a message back to the Prime Minister that what Britain's industry needs is a clear commitment on Britain's entry to economic and monetary union, not bits of tin to stick on the office wall?

Mrs. Roche: I congratulate the company in the hon. Gentleman's constituency. I had the great privilege to be with the Prime Minister at the launch of that challenge. It is tremendous to see some of those products come forward and to see creativity.
As the hon. Gentleman knows, sterling is now at around the same level as at May 1997. The difference, of course, is that inflation is now under control, not out of control. What is absolutely clear is that the Government will make the right decisions in relation to EMU, based on the interest of the country and of our businesses.

Ms Rosie Winterton: In seeking to create a stable economic environment, will my hon. Friend look at the situation that is faced by companies such as Bridon International in Doncaster, which is extremely concerned about dumping, through cheap imports, of steel wire ropes from countries such as India, South Korea and Mexico? What action can her Department take to assist companies such as Bridon's in my constituency?

Mrs. Roche: I am well aware of my hon. Friend's interest in that matter and in these issues. As the House will be aware, if imports are being dumped or unfairly subsidised, the European Commission has the power to take appropriate action. It is currently investigating the import of steel wire ropes into the Community. I assure my hon. Friend that the Department is following that matter closely and we will ensure that we keep in touch with her.

Mr. John Redwood: At a time of factory closures and mass redundancies in manufacturing, it is typical of the Secretary of State that he decides unilaterally to reduce Trade and Industry Question Time by 10 minutes, and then he sits there with a smug grin,
unwilling to answer anything on manufacturing on today's Order Paper, but may I ask the Minister for Small Firms, Trade and Industry, who is a bit more sympathetic to manufacturing than the Secretary of State—that is not difficult—this important question, which many manufacturers are now asking the Government?
Those manufacturers tell me that business needs lower and stable taxes, not the tax rises of this Government. Does the Minister agree that the Government's failure to stop France and Germany from pressing for higher business taxes is unsettling British business and potentially very damaging to it? Will she promise that the Government whom she supports will veto, first, the withholding tax on savings, which damages savings and the City of London, and secondly, any abolition of corporation tax breaks that are enjoyed in this country, sometimes on the advice and policies of the Government?
Thirdly, will Ministers guarantee to veto any move from the Commission—it is now planning one—to make corporation tax a centrally controlled and centrally collected tax, which will be bad news for Britain and British business? All those things mean higher taxes. They will be bad for business and bad for democracy.

Mrs. Roche: The right hon. Gentleman does try—he tries very hard. However, try as he might, there is no escape from the facts. It has been made absolutely clear—my right hon. Friend the Chancellor has made it clear—that we will not support any action at EU level that will damage business competitiveness or jobs. There is no question about that and there is no question of changes being imposed on us.
The right hon. Gentleman and his colleagues really have a cheek. Given that under the last Government Britain had to go through two major recessions when 2 million manufacturing jobs were lost and manufacturing output was devastated, it is rich to hear what the right hon. Gentleman has to say about manufacturing. The Labour party is committed to our manufacturing sector. When I go round the country talking to businesses of all sizes, the one thing they say to me is that I should stop the Conservative Opposition talking down their businesses.

Mr. Alan Simpson: Will the Minister join me in reminding Her Majesty's Opposition that, throughout their period in office they refused to take a close look at how the dumping of products affected the British cycle industry? Will my hon. Friend have a particular look at what is happening with cycles from Taiwan? The sale of cycles from Taiwan to the UK economy has increased by 55 per cent. in the past year and there is already evidence that the Taiwanese Government pay for the research and development and provide the advertising in the United Kingdom for that to take place. Will she look at the distortion of trade that such an intervention constitutes?

Mrs. Roche: I know that my hon. Friend has taken a keen interest in this industry. He will know that this is a matter for the European Union Commission to investigate. The Commission needs hard evidence and, if that exists, I am sure that the industry will supply it. As I said earlier, the Department will continue to monitor the situation closely.

Oral Answers to Questions — EU Trade Deficit

Sir Teddy Taylor: What the total deficit in all trade with the EU has been since 1973 in 1998 prices. [61297]

The Minister for Trade (Mr. Brian Wilson): Figures measuring EU trade since 1973 in 1998 prices are not available. In the first nine months of 1998 the deficit on trade in goods with EU countries was £3.2 billion.

Sir Teddy Taylor: Does the Minister agree that, since we joined the EEC, our deficit in overall trade has been £155,000 million, which is equivalent to £6,000 million every year or, put another way, £16 million every day of the week, including Saturdays and Sundays? Does that not suggest that those who argued that membership of the EU would improve our trade were perhaps over-optimistic? More significantly, does the Minister agree that, bearing in mind that we have a serious structural deficit in trade with Europe, it could create appalling problems for jobs and prosperity in Britain if we were to join the EMU?

Mr. Wilson: I do not agree with the last proposition. Ultimately, it will be a decision for the British people to take, hopefully on the basis of rational argument and the evidence put before them. I have no doubt that the hon. Gentleman will participate in presenting such evidence according to his own views.
The figures quoted by the hon. Gentleman are highly selective and do not provide anything approaching the full picture of our relationship with the rest of the European Union. He must be aware that the sort of figures he was seeking are badly skewed by the fact that, although, as I said, there is a £350 million a month deficit on goods just now, in the late 1980s, under the Government of whom he was a supporter, the monthly deficit was £1.5 billion. The figures that he wants are not as simple as it may seem.
He might also take into account the investment into the United Kingdom not only from the rest of the EU but from elsewhere that we certainly would not receive if we were not a European Union member.

Mr. Llew Smith: Will the Minister explain how our trading position with the European Union—and our ability to create jobs—would improve if we ever decided to hand over to the European Union power over interest rates, public expenditure levels and taxation?

Mr. Wilson: Those are all evolving matters on which the Government and—on EMU—the British people will eventually give their verdict. This week, my right hon. Friend the Chancellor, and, today, my right hon. Friend the Secretary of State and my hon. Friend the Minister for Small Firms, Trade and Industry have made it perfectly clear that nothing will be done by the Government that damages British competitiveness. That is the starting point. Attempting to adduce wholly anti-EMU arguments as if our relationship with Europe is an entirely negative one is unrealistic. It is an argument of the 1970s rather than the 1990s.

Mr. Ian Taylor: Does the Minister accept that the 150 business men who signed the


Financial Times advertisement, which already carried more than 100 signatures—so we are talking about 250 or so business men—stating that they want the Government to provide greater clarification on the EMU entry timetable did so precisely because they are worried about trading prospects for United Kingdom companies after 1 January, when one single currency will dominate 80 per cent. of the single market? Will he assure the House that he will take up with the Treasury the need for it to be much clearer on how British economic policy will achieve convergence, so that the Minister himself can achieve the Secretary of State's objective of ensuring that the question is "when" not "if"?

Mr. Wilson: Since May 1997, the Treasury's policies have been absolutely clear and have carried widespread public support. Part of the problem for the Treasury and the Government in the debate on Europe is that, for the last 18 years, that debate has been skewed by irrational hostility of exactly the type we heard again today from the hon. Member for Rochford and Southend, East (Sir T. Taylor).

Mr. Ben Bradshaw: Does the Minister accept that, by any measure, our trade deficit with Europe would be much worse if we were not in the European Union? Does he also share the concern of many Labour Members, most Liberal Democrats and the few remaining sane Conservative Members that our exporters will suffer a disadvantage as long as we remain outside the euro zone?

Mr. Wilson: My hon. Friend is absolutely right to mention the other side of the coin of our trade relations with the European Union: more than half our exports are to the European Union. I was certainly very pleased to note in last month's trade figures—particularly against the background of difficulties elsewhere in the world—that the value and volume of our exports to fellow EU countries increased in that period. Moreover, we still have a very substantial inflow of investment from EU countries. In general, it is a healthy and balanced relationship. I entirely agree with my hon. Friend that, if by any mischance we were outside that relationship, the United Kingdom's economic prospects would be very much worse than they are now.

Oral Answers to Questions — Community Pharmacies

Mr. Tim Loughton: What discussions he has held with the Community Pharmacy Action Group in relation to resale price maintenance. [161298]

The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): None. However, during the passage through Parliament of the Competition Act 1998, my right hon. Friend the then Secretary of State and my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) met representatives from the Community Pharmacy Action Group to discuss resale price maintenance in that legislation.

Mr. Loughton: Does the Minister think that he knows better than the Community Pharmacy Action Group, which has warned that at least 3,000 community pharmacies could close because of changes to resale price

maintenance in the Competition Act—a view that was echoed by 150 Labour Members in early-day motion 643? What comfort can he offer community pharmacists in my constituency, particularly in Worthing and Southwick, who offer vital services—such as 24-hour opening, emergency cover and free delivery, particularly to pensioners—but who now face going out of business?

Mr. McCartney: The hon. Gentleman is talking arrant nonsense. During the passage of the Competition Bill, the hon. Member for South Cambridgeshire (Mr. Lansley) admitted that the action group had accepted the way in which the Government were carrying out the proposals and had dropped its objections. The Director General of Fair Trading has applied to the restrictive trade practices court for leave to have the continuation of resale price maintenance reviewed. If the court concludes that resale price maintenance for over-the-counter medicines continues to be in the public interest, it will benefit from a five-year exclusion from the prohibition of anti-competitive agreements in the Competition Act 1998. The Government are committed to community pharmacies. That is why my right hon. Friend the Secretary of State for Health increased resources to that sector in his recent review.

Mr. Peter L. Pike: If competition from superstores puts local chemists out of business, will not the elderly and the poor lose most?

Mr. McCartney: The Government are more committed than anyone to community pharmacy services. The hon. Member for Tunbridge Wells (Mr. Norman)—the vice-chairman of the Conservative party—is taking a legal action on the issue. That is typical of the Conservatives. They are in favour of big business and do not defend small business.

Mr. Andrew Lansley: Given the Government's rhetoric during the passage of the Competition Bill about the importance of community pharmacies, will the Minister undertake that the Government will give evidence to the restrictive trade practices court during the forthcoming hearings on the importance of community pharmacies in maintaining a service on competition grounds, and will put forward the health evidence and the primary care benefits of community pharmacies?

Mr. McCartney: The hon. Gentleman knows that the issue is before the court. The Government have no power to say anything because the issue is sub judice.

Oral Answers to Questions — Manufacturing Investment

Mr. Alan W. Williams: If he will make a statement on the latest figures for investment in manufacturing (a) in cash terms and (b) as a percentage of GDP; and what the comparable figures are for the United Kingdom's main competitors. [61301]

The Minister for Energy and Industry (Mr. John Battle): In 1996, the latest year for which internationally comparable figures are available, the Organisation for Economic Co-operation and Development estimates that


the value of manufacturing investment in the UK was £15.4 billion, or 2.1 per cent. of GDP. Manufacturing investment accounted for 3.1 per cent. of GDP in Germany, 2.3 per cent. in France and 2 per cent. in the United States.

Mr. Williams: I am grateful to my hon. Friend for those figures, which show once again that manufacturing investment in Britain lags behind that in our competitor countries. Why have we consistently invested less in manufacturing industry over the decades? What have the Government done to tackle the problem and what further action does the Department of Trade and Industry intend to take to boost manufacturing investment?

Mr. Battle: Since the general election, manufacturing investment has been greater as a share of manufacturing output than at any time since 1985. The Government are taking key action to support manufacturing. We are investing in the science base to benefit engineering and technology. The DTI is a catalyst driving forward innovation, supporting the smart and link programmes that link government together in practical working partnerships focused on the future. We have taken action to strengthen supply chains, such as the industry forum masterclass that the DTI has set up. We are working on a detailed action plan with the textile industries to get designers nearer to manufacturers. I shall address the shipbuilding forum on 16 December. The forthcoming competitiveness White Paper will provide a framework within which we can all work to support manufacturing and the regeneration of some of the older industries.

Mr. John Redwood: Investment is under threat from the Government's policies of high taxes, high exchange rates and high interest rates. I am sure that the Minister agrees that a competitive exchange rate is crucial to future manufacturing investment and success. Given that the Secretary of State—who once again does not want to answer on manufacturing—thinks that it is a question of "when" rather than "if' we join a single currency, again showing his normal disregard for public opinion and Parliament, will the Minister answer these three questions? One: will he confirm that all 11 states entering the single currency are doing so at their exchange rate mechanism mid rates? Two: will he also confirm that our exchange rate mechanism mid-rate is DM2.95? Three: does he accept that entry at such a rate would be a hammer blow to manufacturing and manufacturing investment? Are he and his boss the Secretary of State proposing that we go cap in hand to seek a devaluation of our ERM mid-rate or are they saying that we should go in at that rate and that manufacturing can go hang?

Mr. Battle: We have made it absolutely plain that we will join at the appropriate rate. The right hon. Gentleman's questions come way down the course, but it is interesting that he asks them now. I am tempted to ask him whether he has cleared them with the leader of his party, who at least seems to be rather tougher than his previous leader, with whom the right hon. Gentleman fell out.

Oral Answers to Questions — European Aerospace Industry

Mr. Michael Jack: What support his Department has given towards strengthening the performance of the European aerospace industry. [61304]

The Minister for Energy and Industry (Mr. John Battle): Since the general election, the Government have agreed to invest in the United Kingdom aerospace industry through launch investment. We have also strongly encouraged the sector to play a leading role in international restructuring in Europe and we are involved in partnership with the industry in a range of measures aimed at improving its global competitiveness.

Mr. Jack: I am disappointed that the Minister did not mention the civil aviation research and demonstration programme, which has played a leading role in enabling the United Kingdom's aerospace industry to contribute to the strength of the industry in Europe through developments such as the Airbus wing and the RB211. There is disquiet in the industry about whether the Government are considering cancelling the programme and cutting the remaining £20 million of help that is given through that mechanism. Will he give the industry the reassurance that it needs and say that the Government will continue to support technical development through the research programme, and that resources will not be cut?

Mr. Battle: The Government are investing up to £323 million, with a return over the next 17 years, which is a heck of a lot more than the previous Government invested in the industry. We have worked hard to ensure that the Airbus project comes together. Last December, the Prime Minister, with the Germans and the French, drew up a trilateral statement saying that the industry in Europe needs restructuring to face international challenges. We accepted the need for investment; indeed, we are investing more than the previous Government did, as companies acknowledge and welcome rather more than Conservative Members do.

Mr. Christopher Chope: The regulatory and competition issues in the aerospace industry are so important that the Secretary of State has had four meetings with British Aerospace in the past few weeks—indeed, I am surprised that he is not answering this question. He also in the past few weeks announced major BAe sponsorship of the dome. Does the Minister accept that the only way in which the Secretary of State will ever be seen to be an impartial regulator is if he gives up his sponsorship of the dome?

Mr. Battle: The hon. Gentleman isn't half trying hard. He can try his luck during questions on the dome if he waits seven minutes. [HON. MEMBERS: "Two."' There is no question of my right hon. Friend's integrity and impartiality. If the hon. Gentleman is seriously interested in the aerospace industry, he should be celebrating the fact that Airbus announced at Farnborough this year a record £7 billion in orders, which is more than the Americans ever had—there are orders for 135 aircraft. We have worked hard with the industry to ensure that it will win orders and have a successful future.

Mr. Gordon Prentice: We cannot let the carping and criticism of the right hon. Member for Fylde


(Mr. Jack) go unchallenged. Have not companies such as Rolls-Royce in my constituency benefited hugely from the Government through launch aid for the Trent engine? Launch aid has also been given for the development for the Airbus.
We have been reading in the newspapers about the large number of redundancies—48,000—that Boeing is planning to make in the United States. Will my hon. Friend say what the ripple effect will be? What are the implications for the European aerospace industry?

Mr. Battle: My hon. Friend raises a serious issue. The industry is undergoing a mega restructuring and we are watching carefully to see what the ripple effect will be on the supply chain in this country. We need to work hard to ensure restructuring in Europe so that the industry can withstand the changes and work towards a positive future. I sometimes have the impression that Conservative Members talk down manufacturing and the economy at every opportunity. Just because their party is sinking, they do not have to drag the economy down with them.

Oral Answers to Questions — MILLENNIUM EXPERIENCE

The Secretary of State was asked—

Opening and Closing Ceremonies

Mr. David Chaytor: What progress has been made with plans for the opening and closing ceremonies at the millennium dome. [61327]

The Secretary of State for Trade and Industry (Mr. Peter Mandelson): The beginning of the year 2000 will be celebrated right across the country. The New Millennium Experience Company's plans for the opening ceremony are progressing well. The company is liaising with the relevant London authorities, Government Departments and broadcasters to ensure that there is a co-ordinated approach to the new year's celebrations at the beginning and end of 2000. Plans for the closing ceremony are, understandably, still at a slightly early stage.

Mr. Chaytor: Will my right hon. Friend make every effort to ensure that the opening ceremony truly reflects the diversity of life in this nation, which some of our national ceremonies—I am thinking of the state opening of Parliament, for example—do not always do? Everybody in the United Kingdom would agree that we want a ceremony that reflects north and south, young and old, black and white—the whole nation together.

Mr. Mandelson: My hon. Friend's points are at the heart of the millennium experience and the year-long millennium festival that will take place during the year 2000, and at the heart of the national programme, the millennium challenge, that will take place next year in the run-up to the opening of the dome and the millennium experience itself. The opening and closing ceremonies will reflect the Christian significance of the celebration and the diversity and creativity of the UK as a whole. Both ceremonies will be fitting occasions, uniting the entire country and giving everyone something to be proud

of in a unique marking of the millennium by Britain which will bring together the best of British—pride in our past and, I foresee, considerable confidence in our future.

Mr. Peter Ainsworth: With so much still left to achieve—but as we begin to look towards the opening ceremony—may I ask the Secretary of State to join me in congratulating the on-site contractors, the team of the New Millennium Experience Company and, in particular, Jenny Page, on their heroic efforts so far—in circumstances not entirely helped by the involvement of the Secretary of State—to ensure that there will be something worth while opening on 31 December next year? Given that the project suffers almost daily from a round of unhelpful and unwelcome rumours and press comment, will the right hon. Gentleman accept—as he has not hitherto done—the vital importance of clarity, frankness and openness in all future statements relating to the dome as the best way to instil public confidence in this project in the 393 days which remain until the opening ceremony?

Mr. Mandelson: I shall try to make my answer slightly shorter than the question. I take enormous pleasure and pride in joining the hon. Gentleman in paying tribute to the New Millennium Experience Company and the scores of people who are working round the clock to make the dome—and the millennium experience—the success that it deserves to be. I am pleased to hear the hon. Gentleman at long last saying something remotely positive about the millennium experience. I only hope that that becomes contagious among his right hon. and hon. Friends.

Sponsorship

Mr. Ben Chapman: What is his latest assessment of the private sector's financial input to the millennium dome. [61328]

The Secretary of State for Trade and Industry (Mr. Peter Mandelson): As announced on 26 November, the New Millennium Experience Company has confirmed private sponsorship support of £120 million: 80 per cent. of the £150 million target. That is a remarkable achievement and already represents more than double the amount raised previously for any single event in the United Kingdom.

Mr. Chapman: Those are indeed remarkable figures. Do they not confirm that the Labour party is working in dynamic partnership with the private sector; that the pessimism of the Conservative party has again proved unfounded; and that the Conservatives' determination to talk down Britain on this and on other matters is misguided?

Mr. Mandelson: My hon. Friend makes a good point. In this, as in so many other aspects of our national life, the Conservative Opposition are desperate for us to fail, and we do not intend to give them that pleasure. I applaud those in the private sector who have shown their commitment to the millennium experience, which will be a great and unique British event. They recognise that their commercial interest coincides with the national interest.
I am pleased to say that, in addition to the information on sponsorship that I have already given to the House, I expect a further £15 million to be announced shortly, and an additional £25 million is subject to detailed negotiation. That is a great achievement by the New Millennium Experience Company, which organises, procures and negotiates the sponsorship, and it deserves our hearty congratulations.

Dr. Julian Lewis: Are the contracts with the sponsors already binding and irrevocable? If not, when precisely will they become so?

Mr. Mandelson: I am pleased to tell the House that all the sponsorship agreements that I have announced have received full boardroom approval.

Mr. Dennis Skinner: Has my right hon. Friend considered the fact that, to improve the financial input, we need a history section in the dome? It could have a prehistoric zone, in which we could have 750 hereditary peers lined up. They could be photographed with young children and others outside McDonald' s, dressed in their ermine, and they could be led by Baby Dome, the Leader of the Opposition. The result would be a magnificent financial success. We could call it the millennium new deal experience.

Mr. Mandelson: As ever, my hon. Friend is most persuasive. I have decided to consider introducing a Cranborne memorial zone, to commemorate a unique contribution to the future of Britain.

Mr. Graham Brady: How many companies have been approached with requests to sponsor elements of the millennium experience. [61329]

The Secretary of State for Trade and Industry (Mr. Peter Mandelson): The New Millennium Experience Company has approached 50 companies with requests to sponsor elements of the millennium experience.

Mr. Brady: I thank the Secretary of State for that remarkably and uncharacteristically brief answer. Given

the number of major British companies that have been approached by him and his colleagues, touting for sponsorship for the dome, there will clearly be concern about apparent conflicts of interest for as long as he is in control of the project's sponsorship. That is thrown into sharp relief by reports in the press this weekend suggesting that he has been personally involved in seeking sponsorship from the Hinduja brothers, in stark contrast with the assurance that he gave the House on 9 November, saying that he would never be involved in procuring or negotiating. Will he apologise for apparently misleading the House, inadvertently or otherwise, and make it clear that he will no longer be involved in touting for sponsorship for the dome?

Mr. Mandelson: I am pleased to say that the Hinduja Foundation is indeed considering making a contribution to the sponsorship of the spirit level zone. That is a much better use of its money than its long-standing financial contributions to the Conservative party.

Mr. Tom Clarke: In the various consultations that my right hon. Friend has mentioned, including those on sponsorship, will he remember the important role for the British tourist industry? Does he recall that the Prime Minister has said that Greenwich should be the gateway to the whole of Britain and, in that spirit and in the spirit of a festival of Britain, does he accept that a great industry such as tourism, our fifth biggest, should be given due regard?

Mr. Mandelson: I am pleased to say that the tourism industry throughout the United Kingdom has been heavily involved in all the planning and organisation of the millennium experience. Everyone who works in that industry or stands to benefit from it will enjoy huge financial benefits and an economic dividend from our organisation of the millennium experience. I predict a halo effect of some £1 billion for the British economy as a result of the decision to organise the millennium experience.

Teachers

The Secretary of State for Education and Employment (Mr. David Blunkett): With permission, Madam Speaker, I wish to make a statement about the Government's consultation on the reform of the teaching profession. This statement relates to my right hon. Friend the Secretary of State for Wales will report separately in the new year.
Over the past eighteen months, the Government have shown their determination to raise standards. Children are learning to read effectively in the new literacy hour. Infant class sizes are falling for the first time in a decade. We are rapidly expanding specialist schools and developing education action zones. We have tackled failure whenever and wherever it exists and we are providing £19 billion of investment to improve education across the United Kingdom over the next three years. That money for reform and modernisation is to give our children opportunities denied for far too long.
Teaching is at the heart of our drive to raise standards. Good teachers are our most precious asset in raising aspirations and achievement. That is why today I am proposing a fundamental step forward for the profession. Our first objective is to develop a new career structure that will recruit, retain and reward the teachers we need.
Under the present system, after seven years, a good classroom teacher earns around £22,500. Further reward is paid only for responsibility, rarely for performance. The Government believe that must change; that is why we are proposing two new pay scales for teachers, separated by a new performance threshold. There will be a tough new appraisal system. Up to the threshold, teachers would progress as now. To cross the threshold, teachers will need to demonstrate high and sustained levels of achievement and commitment. Heads will appraise and review teachers' progress, underpinned by external assessment. That will ensure credibility and consistency.
Success in crossing the threshold would mean an initial salary increase of up to 10 per cent., or around £2,000 a year, and access to further pay steps on the higher scale, based on appraisal of performance. Teachers could then either take on more leadership responsibilities or concentrate on high performance in classroom teaching. Over time, we would expect a majority of teachers to be of a standard to cross the threshold.
Our second objective is to strengthen school leadership. Good heads are the key to success. We need to develop strong leaders, reward them well and give them the freedom to manage. Successful heads who have turned around the most challenging schools could earn up to £70,000 a year, with strengthened appraisal and the option of fixed-term contracts. We also propose to set up a national college for school leadership, drawing on the best that education and business have to offer.
We also want to reward staff for teamwork in raising standards. Our new annual school performance bonus would provide a significant number of schools with a financial reward—payable as a bonus available to all staff—for improved performance achieved year on year and for sustained good results.
Our third objective is to have a well trained profession. We are establishing the General Teaching Council, and have introduced a curriculum for initial teacher

training—with Ofsted inspection—and the induction year for newly qualified teachers. I can announce that we intend to go further by introducing a new national test for all trainee teachers in numeracy, literacy and information technology. Additional help in achieving the standard will be available for mature entrants.
It is vital that we attract the best graduates into teaching to ensure that our most outstanding teachers can move quickly up the profession. Industry and the civil service have fast tracks. We plan to introduce a fast track for teaching to enable good new teachers to make rapid progress. All teachers should keep their expertise up to date. To help them to do so, we are investing in better training in literacy, numeracy and information technology, and in improving the quality and availability of teachers' professional development. A pilot scheme of individual learning accounts will encourage all school staff to invest in their skills over and above Government funding. We will enable more training to take place out of school hours, to minimise disruption to pupils' education through over-reliance on supply cover.
Our final objective is to provide better support for teachers in the classroom. From the investment in repair and renewal through to the learning grid, we are committed to creating the classroom of the future. Today I propose a new targeted fund to improve the working environment for all staff, giving teachers access to the equipment that they need.
The teacher of the future will also make better use of the talent of support staff in schools. Many teachers already use teaching assistants to help with literacy and numeracy, or to support children with special needs. Over the next three years, we will fund at least 20,000 additional qualified teaching assistants with improved training, qualifications and opportunities. We are also keen to see the use of undergraduate and postgraduate students earning while learning, together with those from the wider community.
We also want to support small schools in sharing facilities, technicians or bursary support. I can announce today that a new small school support fund will pilot new ways of working together. It will benefit many rural schools.
The Green Paper contains radical and modernising proposals that will help to transform the standards and status of teaching in this country. It is about something for something. For the first time in years, a commitment has been made to invest and reward teachers in return for a new professionalism. That will mean greater individual accountability, more flexibility and higher standards.
We intend to consult widely with teachers, parents, local authorities and governors, for whom we will provide support and expert guidance to help them implement our proposals.
The vision of a world-class service for our children in the next century is one I believe we all share. Good teachers and support staff are the key to achieving that vision. It is to prepare for that new century, to celebrate the value and worth of our teachers, and for the sake of our children, that I commend these proposals to the House today.

Mr. David Willetts: May I begin by putting it on record that the Opposition believe in proper rewards for good teachers, and that we agree with the Secretary of


State that we are not recruiting and retaining enough good teachers? It is a problem that needs to be tackled, but it is also a problem that has got significantly worse during the right hon. Gentleman's stewardship. Does he recognise that many teachers attribute that fact to the bureaucratic burdens that he has imposed on them?
How does the right hon. Gentleman expect to recruit more people to the teaching profession if he does not treat them like professionals, instead denouncing them as "sneering cynics"? Now, he wants to test them for basic literacy and numeracy. Will he estimate how many of the teachers who are currently being recruited would fail his new test? What has happened to the advanced skills teachers scheme, which only this morning the Prime Minister put at the heart of the Government's proposals? Perhaps even the Secretary of State could not face relaunching it yet again. On 30 March, he claimed that there would be 5,000 so-called super-teachers. Will he confirm that, so far, only 50 have been ecruited?
The Secretary of State talks about paying teachers properly. Teachers would regard it as hypocritical of the Government to launch this exercise today and then fail to implement the recommendations of the pay review body, which are due next year. Will the right hon. Gentleman assure teachers that he will accept its recommendations in full? Can he confirm that his Department wrote recently to that body to urge it to hold down teachers' pay; and will he place in the Library a copy of his correspondence with it?
The right hon. Gentleman mentioned a new threshold for a new structure of teachers' pay, but how quickly will a teacher reach it? How long will it take for the majority of teachers to cross it? He says that he wants to strengthen school leadership, but he well knows that there has been a disastrous decline in the number of teachers applying for the national professional qualification for headship. Does he agree that the reason is that they are all too busy responding to his instructions and initiatives?
We need better ways to encourage top-quality graduates into the profession, but the right hon. Gentleman's fast-track scheme is a vague plan, which gets five paragraphs in a 72-page document. Will he confirm that his fast-track scheme applies only to a small percentage of the 450,000 members of the teaching profession? As the Prime Minister might say, these are policies for the few, not the many.
Once more, the Secretary of State puts his trust in plans and targets, rather than the professionalism of teachers and the judgments of parents. Does he know what is already happening to his grand plans in practice? Only yesterday, I came across a school that has set targets in its educational development plan which are lower than its current level of attainment. Is the Secretary of State proposing a crude tick-in-the-box school performance awards scheme, with every incentive to set soft targets without any fear of being challenged; or will he rely on outside consultants—and how much will that cost?
Will the Secretary of State also confirm that the initiatives are to be paid for out of central funds, bypassing local education authorities? Will he confirm that the proportion of school funding from standard spending assessments is steadily falling as, instead, head teachers have to spend all their time applying for individual packets of money, under his personal control? The Secretary of State is exasperating teachers with his

ceaseless flow of initiatives. At the last count, schools and LEAs were having to submit 17 plans to him. Now he even has a working party to cut the paperwork produced by all the other working parties.
We are told that education action zones are the most radical initiative of the lot. Indeed, the main appeal of joining such zones is that the initiative enables schools to opt out from all the other schemes that the Secretary of State has imposed on them. Will he therefore confirm that schools in education action zones will not be bound to implement whatever changes he introduces to teachers' pay and conditions?
The statement is warm words and ambitious claims, but as always with the Secretary of State, there is little about the practicalities. We want practical, flexible measures to recruit, retain and reward good teachers—measures which rest on local flexibility and local discretion. Instead, the Secretary of State has produced another cumbersome scheme, based above all on his belief that the man in Whitehall knows best. We very much doubt whether it can be made to work. Teachers, parents and children deserve better.

Mr. Blunkett: I think the House deserves better than that. A party that presided over the largest exit of teachers in memory owing to its inept messing about with the pension scheme and severance pay is ill prepared to come here this afternoon and talk about difficulties with recruitment. We are facing up to those problems in a way that the Conservatives failed to do in their 18 years in office. The whole programme is geared to recruiting, retaining and rewarding. We know that there is a serious problem: 35 per cent. of those who train do not go into teaching within two years, which is a tragic waste of resources. Let us work together to attract people and keep teachers in the profession.
The hon. Gentleman spoke about basic literacy and numeracy. The fact that many of those who were educated in the past 18 years do not have basic literacy and numeracy skills is not down to the Labour party, but is a result of the Conservatives' failure to provide the necessary phonics, grammar and spelling, which the hon. Gentleman attacks every time he rises to speak.
I tried to ensure that Opposition parties had the Green Paper long enough to allow them to take a look at it this afternoon, instead of giving them only the usual half hour. I had hoped that the hon. Gentleman would at least see that the advanced skills teacher posts form part of the new leadership tier—they are in there. We are pleased that 1,100 people have already applied in time for the target date for the 1 April roll-out; and 80 per cent. of local authorities have put in schools for the advanced skills teacher posts.
What about the pay review body? Who was it kept holding back teachers' pay and did not implement awards in full? I love the way in which the Conservatives, whose instructions to the pay review body to hold down pay and not to implement awards resulted in the catastrophe that occurred in the teaching profession a year or two ago, come here and have the cheek to tell us what the hon. Member for Havant (Mr. Willetts) has said today. No, I did not tell the review body to hold down teachers' pay; I told it to take account of the circumstances of inflation and, above all, to take account of the fact that we did not want to stage the review from next April. We are clear about that.
How quickly will teachers reach the threshold? We have instigated the fast track for new entrants and the figure will be about 1,000 people a year, which, given the numbers coming into teaching, is a substantial figure. Others who are already in the teaching profession—new teachers in years one and two—will be able to multiply the number of increments through which they can move as part of the new system of appraisal. Fast track linked to appraisal will enable people quickly to reach the point which currently takes them seven years to reach. The whole system is based on appraisal and external assessment—a light touch that enables heads to do their job, but with assessment being carried out from outside to secure fairness and consistency, which is what I described in my statement.
The hon. Gentleman raised the issue of getting money to schools. It would be grossly unfair if we used a system that resulted in schools that did not have a large number of teachers passing through the threshold getting the money, while those that legitimately had a large number of high-performing teachers could not afford to pay them. That is why, in the early stages, we shall ring-fence the money and consult on ensuring that the money reaches the schools where teachers require the pay. The teaching profession has for years asked us to make sure that there is no block on the ability to pay good teachers well, just because they happen to be in the wrong authority or the wrong school, based on the distribution system.
Education action zones will pioneer our programme. They will be one step ahead of it and they will be able to reward good teachers extremely well. That is why we set them up and why I am sure that the whole House will support the new programmes.

Mr. John Gunnell: I welcome my right hon. Friend's statement, which appears to be one that must give the teaching profession new life and expectations of a far better time in the future under a Labour Government.
I regret the fact that the hon. Member for Havant (Mr. Willetts) made such poor use of the advance sight of the document that the Secretary of State gave him. He clearly approached the Green Paper in the wrong way: he looked to see how he could carp and criticise instead of offering constructive suggestions about education in the future. I regret the fact that the hon. Gentleman missed the opportunity to show support for our teachers and instead concentrated simply on the mess that he knows his Government made of the same programmes—[Interruption.]

Madam Speaker: Order. I must correct hon. Members. This is a time for questions, not speeches. Is the hon. Member for Morley and Rothwell (Mr. Gunnell) coming to his question?

Mr. Gunnell: I am coming—

Madam Speaker: Good. The hon. Gentleman is providing a good example of how not to put a question to the Secretary of State. It is the first Back-Bench question,

and I hope that the hon. Gentleman will not mind my using it as an example of how not to question the Secretary of State.

Mr. Gunnell: I welcome particularly the fact that teamwork is rewarded, because there is no profession where it is more important. If I may give a specific example—

Madam Speaker: No, I am sorry. A joke is a joke—I have a sense of humour the same as anyone's, but I cannot allow speeches. There will be no examples. Just ask a question, please.

Mr. Gunnell: In order to exploit his skills, a science teacher often relies on a laboratory assistant who does the preparation work. Under such circumstances, how will a school recognise both the excellence of that teacher and the role of the laboratory assistant in preparing his work?

Mr. Blunkett: I thank my hon. Friend, and I agree entirely with the preamble to his question.
Those who assist and support teachers will benefit from the school bonus programme, from the development of the individual learning account and from new training and support. Many of them will want to progress in their professions and some will want to begin teacher training. We will encourage them to do so on a modular basis so that they may continue to earn their living while preparing to enter the teaching profession.

Mr. Don Foster: Will the Secretary of State confirm that, under the approach adopted by the previous Administration, nearly 20,000 experienced but demoralised and disillusioned teachers left the profession in just one year? We need to do better. Does the Secretary of State accept that the Liberal Democrats welcome the broad thrust of the proposals? Will he confirm that performance-related pay will not be paid according to results? It should be based on the skills, experience and competence of teachers, not the performance of their pupils.
Will the Secretary of State further confirm that the opportunities for higher rewards will be available to all teachers and that he expects the majority of teachers to benefit from them? However, will he also acknowledge that he is relying a great deal on the assessment procedure, and that there will be complications if that procedure is used simultaneously to judge teachers' salaries and an appropriate amount of continuing professional development?
Finally, does the Secretary of State accept that, although his proposals will assist in the longer term, there is an immediate crisis? May I therefore welcome his clear and unequivocal statement today that the teachers pay award will not be phased? Can he confirm that, at a minimum, it will be sufficient to meet the real inflation costs hitting teachers' pockets?

Mr. Blunkett: I welcome the hon. Gentleman's opening comments. We can work constructively to get the proposals agreed. On the final point, the recommendation is entirely in the hands of the review body and must be independent. I will respect that.
I shall deal with the essential points that the hon. Gentleman raised. Teachers will move to and will be appraised for moving through the threshold on their performance and their commitment, not on the quantum of past exam results of students whom they may well not have had a hand in teaching. That aspect falls into the teamwork approach and will be dealt with separately through sophisticated arrangements for the school bonus. There is nothing crude about that which would punish teachers for working in challenging schools in difficult areas.
Sufficient resources will be available over the initial period to ensure that a majority of teachers can access the programme, bearing in mind that many teachers will be entering the profession and will be in the early stages. About £1 billion will be available in 2000–01 and 2001–02 to put the proposals into place. It is the best promise that teachers have ever had.

Miss Melanie Johnson: Unlike the hon. Member for Havant (Mr. Willetts), I believe that the national professional qualification for headship offers great scope for the development of head teachers. I warmly welcome my right hon. Friend's comments about how valuable and important heads are in the lives of schools and the quality of education. How does my right hon. Friend see the NPQH developing through the new structures that he outlined this afternoon?

Mr. Blunkett: The development of the college that I described will play a signal role in helping us to extend the NPQH. As hon. Members know, great enthusiasm for it has been expressed by heads. In the initial period we, together with the Teacher Training Agency, have been appraising how we can improve it and build on the experiences of head teachers.
We want to be able to fast-track those willing to undertake leadership, in order to allow them to do so on a modular basis and to accelerate their professional development. We want to put in place as heads those enthusiastic young men and women who see their role in education in the future and have the natural skills to lead the profession in the new century.

Mr. Tim Boswell: Does the Secretary of State recall that the 1995 Conservative Government's Blue Paper on teacher training began with the words
In education the role of the teacher is central"?
Any aspects of his proposals that stimulate higher standards in the teaching profession, if fulfilled, will be welcome to us.
Nevertheless, may I raise two points with the right hon. Gentleman? The first is a technical one, relating to the basic skills requirements for teachers. Is it not high time that those were built into the standard suite of qualifications—the GCSE, A-level and degree level performance of teachers—so that they do not need re-examination? If anything, existing teachers may need some strengthening in that respect.
Secondly, does the Secretary of State accept that there is likely to be a severe strain on resources, both in assessment and in paying for this substantial pattern of incentives? If so, is there not a danger, while the proposals are being worked through, of a two-tier profession? They can in no sense be a substitute for the adequate

remuneration of ordinary classroom teachers who are doing their best and largely succeeding in doing a proper job for their pupils.

Mr. Blunkett: I accept the hon. Gentleman's sensible questions in the spirit in which they were delivered. The lag between now and the underpinning of A-level and advanced year NVQ in respect of key skills must be addressed—hence the development of the literacy, numeracy and IT programme that I described. We must help mature entrants to catch up without feeling at a disadvantage.
The question of how we implement that is important. We will have performance management systems in place, which will be monitored by Ofsted and the Audit Commission. The performance management systems will be crucial to ensure that the appraisal and review are non-bureaucratic. The outside assessors will give consistency and fairness to the system, so that people cannot claim that there has been discrimination or the blocking of a teacher's application for movement through the threshold. It is important that we get that right in the early stages. If we can move quickly after the consultation period, I should like to start the appraisal and begin the assessment process before implementation in 2000 so that we can move people on to the new scales as quickly as possible.

Fiona Mactaggart: Is my right hon. Friend aware of how welcome his promise to improve the environments in which teachers work will be? As a teacher who spent at least two years in an asbestos-riddled hut, I know how many of my colleagues would have been pleased to benefit from that.
I invite my right hon. Friend to use the opportunity that the proposals present to reconsider the requirements that university institutions put on entrants to the primary postgraduate certificate of education. I am concerned that such entrants are required to have degrees in national curriculum subjects. That requirement was introduced in advice by the previous Government.
There are, therefore, people with excellent degrees—in subjects such as modern languages, which do not apply in primary years but develop skills that are relevant to literacy teaching—who are not eligible for the primary PGCE. If we have ways of testing literacy and numeracy skills, as well as information and communications technology skills, there is a strong case for changing that requirement. Will my right hon. Friend consider doing so?

Mr. Blunkett: I am very happy to tell my hon. Friend that we were concerned about the way in which that previous advice was being interpreted. My hon. Friend the Minister for School Standards has sent out a letter clarifying that, so that there will be no future misunderstandings. I hope very much that it will help to alleviate the problem.
My hon. Friend's question gives me the opportunity to pay tribute to my hon. Friend the Minister for School Standards. She and my advisers and officials have worked incredibly hard with me on the Green Paper, and I appreciate that greatly.

Mr. Graham Brady: The Secretary of State will be well aware that the results


achieved by the secondary modern and grammar schools in the borough of Trafford are once again among the best in the country. That is largely because we have a great number of excellent teachers in those schools.
Will the Secretary of State make it clear—I think that he gave such an assurance and I welcome it, if he did—that there is no upper limit on the number of teachers who can qualify, and that there will be consistent interpretation according to the quality of their performance and nothing else?
Will the Secretary of State also make it clear that schools or the local education authority will not have to fund the programme; and—this is important, given the large numbers involved—how quickly does he envisage all teachers who may qualify being able to go through the qualification period? What are the implications in terms of cost and the number of external assessors who need to be part of that programme?

Mr. Blunkett: There were a large number of questions rolled into one there, so I shall be brief. I have made it clear previously and this afternoon that money in the initial stages would have to be ring-fenced and directed so that schools could afford to implement the programme. Obviously that will need to be consolidated; otherwise schools would accelerate every teacher whom the head thought was appropriate as quickly as possible, without any constraint whatever.
The hon. Gentleman should not presume that teachers in schools with high performance would automatically go through the threshold. Teachers who are doing a first-rate job in challenging areas with schools that have enormously challenging intakes may find themselves equally able to access the threshold and the progress that needs to be made. I hope that they do.
As I told the hon. Member for Daventry (Mr. Boswell), we have to get as many teachers as possible moving towards and through the threshold, to accord them the status that they deserve and to reward them for the work that they are doing.

Mr. Gordon Marsden: I welcome my right hon. Friend's comprehensive statement. It is important to emphasise that it is comprehensive and not only about pay levels. Will he outline further the measures in the Green Paper for encouraging the collaboration of teachers to raise standards?

Mr. Blunkett: The bonus system will encourage all staff to perform and work together, and the collaborative fund for small schools will complement the work that is already taking place. In education action zones, schools are beginning to collaborate and work co-operatively to develop ways of supporting and helping each other. They are establishing intranet systems, so that they can share information and advice. The more schools work together to lift standards for children rather than compete with each other in a marketplace, the better it will be for our students.

Mr. Desmond Swayne: When will the Secretary of State realise that my postbag is filled with complaints from head teachers and governing bodies as a consequence of his initiatives? Perhaps the most talented

primary head in Hampshire is to be lost to the private sector as a consequence of the Secretary of State's initiatives. He is contributing to this problem, and it is time that he addressed it.

Mr. Blunkett: I am always slightly amused, if not mystified, by Conservative Members who say that good state heads and teachers are moving into the private sector and then criticise the measures that we are taking, which aim to match the standard and the methodology that the private sector claims to be using. Our proposals are aimed at providing good leadership, clear discipline, a decent environment, good equipment, low class sizes, and literacy and numeracy strategies that place emphasis on phonics, grammar and spelling—but they are opposed by Conservative Members.

Jacqui Smith: May I reassure my right hon. Friend that the reason I left the teaching profession in May 1997 was not that I was demoralised, but that the country was demoralised by the Conservative Government? Conservative Members have provided good evidence of that this afternoon. One of the most frustrating features of my 11 years in teaching was the reduction in the funding and opportunities for professional development and training, so I welcome my right hon. Friend's announcement on individual learning accounts for teachers. Will he outline how those accounts will be administered, when we can expect them and when teachers can begin to benefit from the effects they will have on professional development and improving standards?

Mr. Blunkett: We are establishing a pilot programme—initially with £5 million—to test the commitment of teachers and non-teaching staff who want to develop their skills and professionalism. That is on top of the resources that we are already allocating to continuing professional development through the standards fund—£60 million this year for literacy and £60 million next year for numeracy—and the additional £230 million for the training of all teachers on information and communication technology. This is a small pilot programme on top of the enormous investment currently going into the system.

Mr. Edward Leigh: Would it help or hinder a head's leadership role if he were given more freedom of manoeuvre in the hiring and firing of staff?

Mr. Blunkett: No, I am sure it would not.

Helen Jones: May I welcome the Secretary of State's statement, which goes a long way towards keeping good teachers in the classroom? Will he explain how the system of appraisal will be balanced and fair as between schools and between teachers teaching different types of classes in the same school? One teacher may have a lot of A-level teaching and another may teach slow learners. Will he give the House a few more details on how the outside assessors will work in conjunction with the heads, and how teachers will be able to appeal against their assessment if they are dissatisfied with it?

Mr. Blunkett: The appraisal will be personal to the teacher, so it will appraise the worth, commitment and performance of teachers in the circumstances with which they are faced and according to the work they are doing.
The management performance system, which will itself be monitored, will be crucial to ensuring that appraisal works, is rigorous and is seen to be fair. The assessor's job will be to sample the way in which appraisal is working, and to test the claims of teachers who consider themselves to have been badly treated against an assessment of those teachers' performance.
Ultimately, however, the success of the system will depend on the right management and leadership, so that appraisal is not second-guessed by the assessors, but reviewed and monitored. The system must be transparent, and there must be no discrimination.

Judy Mallaber: I welcome the proposals, which will enable good classroom teachers to progress. Many teachers are currently being blocked: they cannot progress without taking on extra responsibility.
What rewards or incentives will be available to schools where teachers are shown to have made progress as a team—where all staff members have made a contribution? We should not only reward individuals for their ability to show the quality of their own teaching.

Mr. Blunkett: I have already stressed the need for us to view schools as consisting of a range of men and women who are contributing to an improvement in standards. It is crucial for the future that the professional teacher should be a learning manager, able to direct and use paid staff, volunteers and parents imaginatively, and to bring out the best in the school.
I am hoping that some two thirds of schools will have access to the bonus system, to which we are allocating £60 million each year. Not only will staff be rewarded; we shall give new opportunities to non-teaching staff to display their talent and to develop professionally, which will, I think, be widely welcomed in the profession.

Caroline Flint: I welcome all the measures that my right hon. Friend has announced, which will benefit teachers in terms not just of pay, but of the school environment and the whole school community—teachers and non-teachers.
What will be the structure of the consultation? One of the criticisms made of the last Government was that not enough time was allowed for consultation on important measures. As we are now discussing the need for modern teachers for a new century, and a new professional status for teachers, I should be grateful if my right hon. Friend gave us some idea of how much time will be allowed, so that we can do our job as Members of Parliament and ensure that we hear comments from the grass roots.

Mr. Blunkett: Four months will be allowed for consultation, which can take place until 31 March 1999. The consultation will be open to everyone who wants to contribute to getting the system right. In a week or two, a technical paper will be published to back up the Green Paper. We want to ensure that the details of implementation can be discussed not just with the profession but more widely—with, for instance, governors' representatives and - local education authorities—and that everyone with something constructive to say is heard and responded to.

Charlotte Atkins: I, too, welcome the statement. I particularly welcome the long consultation period, which will enable teachers in the classroom to respond to the proposals.
How does my right hon. Friend intend to recognise, and boost, the vital role of the classroom assistants who help teachers to raise educational standards?

Mr. Blunkett: I have mentioned the 20,000 additional assistants who will be provided over the next three years. I consider that a major contribution to changing the way in which we use the talent that is at our disposal, so that teachers can undertake the key professional tasks for which they have been trained, and can develop constructively over the years.
The use of assistants should be seen as part of the development of their own future, and their own talents. Many are making a substantial contribution, not just to literacy and—in the years to come—numeracy, but to special needs education. Many special needs children would be in a much more difficult position if it were not for the talent of the non-teaching staff who help them so much.

Ms Sally Keeble: I welcome my right hon. Friend's statement, which I am sure will do much to improve the quality of education in our schools. However, I wonder whether he could say a bit more about how he envisages school governors working with head teachers on staffing structures and the skills mix for the school, and, in particular, how he sees governors going about the appraisal of head teachers, which I imagine will be a difficult task.

Mr. Blunkett: I want to make it absolutely clear that governors play a crucial role. Often, many of them feel overwhelmed with what they are being asked to do, without the necessary advice and support, so putting in place new guidance and support systems for governing bodies, providing a new role for education authorities where schools are local education authority community schools, and making available the resources to Church and foundation schools will all be crucial. We must ensure that, this time, governors are in a position to be able to do the job and to benchmark what is taking place in other schools, so as to learn about the way in which other governing bodies and schools have worked. In that way, governors can both hold the head to account and support the head in the key management job of raising standards.

Mrs. Theresa May: For clarification of a point raised earlier, will the Secretary of State place it on record unequivocally that he will accept in full and implement the recommendations of the school teachers review body next year?

Mr. Blunkett: Just to be helpful, the answer to that is: no, I will not, for the very reason that I spelled out earlier. It is an independent review. We recommended that the award should take into account our desire—our will—to carry out the recommendation in full; but—so that we all talk in a sensible, mature fashion—should for some reason the review body come up with an award that was simply unaffordable next year in all circumstances, no one in his right mind would expect us to have committed ourselves on 3 December, before the review body had reported, to implementing that award. And I do know that the hon. Member for Maidenhead (Mrs. May) is in her right mind.

NHS (Wales)

The Secretary of State for Wales (Mr. Alun Michael): With permission, Madam Speaker, I wish to make a statement on the future of the health service in Wales.
The national health service is one of Labour's proudest creations, especially in Wales. It is a tribute to the people who work in the NHS that it continues to give such a high standard of care and retains such public confidence. People want the NHS to be modernised and strengthened, rather than undermined or replaced.
I will not labour the point, but the NHS in Wales has not been given a fair chance in recent years and 18 years of damage cannot be repaired in 18 months. Lack of coherence in the long-term planning of the health service in Wales has frequently left clinicians, managers and officials trying to make the best of a bad job.
I saw that in my area, where the failure to develop an adequate 10-year plan in the early 1980s was compounded by a lunatic scheme to build a third district general hospital in the Cardiff area. The abandonment of that plan and subsequent piecemeal decisions have been bad for morale and for the aim of providing high-quality health care. I hope that today's statement will lay the foundations for a new partnership approach which strengthens the health service to create one NHS to serve the people of each community in Wales, replacing the two, three or four divided services in some areas.
Standing still is not an option for acute services. The Royal College of Surgeons generally wants specialist services to be centralised in fewer units. Instead of being forced to respond to clinical advice in a piecemeal and expensive way, trusts will be able to organise safe specialist services across different sites cost-effectively. A new, coherent pattern of trusts is needed to replace a situation in which many act as if they are mediaeval city states each competing with the other, rather than organisations which need to be partners with each other in providing health care.
Before we came to power, the then shadow Minister with responsibility for health in Wales pledged that we would cut the number of NHS trusts in order to direct resources away from administration and into patient care. The new configuration of trusts, which I am announcing today, follows 18 months of widespread consultation. May I pay tribute to my hon. Friend the Member for Bridgend (Mr. Griffiths) and the Under-Secretary of State for Wales, my hon. Friend the Member for Cardiff, Central (Mr. Jones) who played such a leading part in those consultations and discussions? Configuration is not an end in itself so I wish to spell out clearly the new shape and direction of the NHS in Wales and the way in which I expect board members and managers to carry out their work in future.
Unproductive competition and piecemeal changes in recent years have led many people to worry about the future of a specific hospital in their area. People rightly identify with "their" hospital and that is to be encouraged by the trusts, not seen as old-fashioned or irrelevant. I can reassure people in every part of Wales that the approach they want, reinforcing the hospitals and institutions they respect and depend upon, will be the way forward for the future.
Wherever possible, we have followed three principles. First, we want to bring together neighbouring trusts which provide acute services in order to eliminate competition, promote collaboration, reduce unnecessary duplication, tackle financial problems and attack waiting lists. Secondly, we want to combine community health and acute services to create a single health service for each area. That will allow clinicians in both sectors to collaborate in providing a seamless service to each patient. I expect that to be of particular benefit to the elderly. Thirdly, wherever possible, the new trust will share the same boundaries as unitary authorities to simplify relations with social services and within the new local health groups we are establishing.
Those principles will better provide for the co-ordination of care for each individual patient, whether on an acute ward or in a community hospital, a nursing home or at home. The changes will remove the problem of bed blocking and release resources for more urgent cases.
Those principles have won general support in Wales, but applying them can be difficult. The distribution of the population, the distribution of hospital services and the geography of Wales are all against us—otherwise it is straightforward! As a result, several themes came up consistently from the consultations. I wish to be absolutely clear on our response to these for the benefit of the public and for the benefit of planners and managers in the health service.
First, reconfiguration in itself must not stop anyone going to a local hospital. As at present, general practitioners will be able to refer patients where they believe it is in their clinical interests to do so. Secondly, mergers will not be takeovers, but the creation of a new partnership. Key services must not be moved to the larger hospital. Community and mental health services must not be ravaged for the benefit of acute services. No hospitals will close as a result of reconfiguration. If health services should change or a hospital should close, such events must occur for objective reasons, not as a result of reconfiguration.
Some people have asked for reconfiguration to be put off for a year or more. That is not an option. We have to keep the pre-election promise of cutting bureaucracy, and create health service structures that will enable the new Assembly to undertake its work of accountability. Reconfiguration is essential if trusts are to plan their services effectively, to deal with the mounting pressures upon them and to make real inroads into waiting lists and cope with current financial pressures.
Reconfiguration must not be just a question of merging organisations or drawing lines on a map. I am prepared to take time to explain the reasons behind each decision and to demonstrate that I have listened to people's concerns. For that reason, I have prepared a much fuller statement explaining my decisions which will be sent to trusts, health authorities, community health councils, local authorities, trade unions and the press. I am placing a copy on the Board this afternoon for every hon. Member with a Welsh constituency and for representatives of the Conservative party. I will also send a letter to trust chairs to pass on to staff to allay concerns.
I have approved the establishment of eight new trusts on 1 April 1999, but I wish first to refer to two areas where I am not going ahead with the proposals on the basis on which consultation took place. I do not intend to


agree to a merger of the Powys Health Care NHS trust with Ceredigion and Mid Wales NHS trust. On each of the visits I made to Powys during my period as a shadow Health Minister for Wales, I was impressed by the degree of local unity, which was reinforced by GPs and nurses during my recent visit to Newtown hospital and by views expressed by local MPs, Labour party members, trade unions, and local councillors as well as the trust itself.
The decision leaves challenges for the Powys trust, and I shall insist that it delivers on the assurances given to the Under-Secretary of State for Wales, my hon. Friend the Member for Cardiff, Central, that the benefits and savings of reconfiguration can be delivered without the need for a merger. I hope that local Members and others will support the board in delivering on those commitments.
I am very much aware of the isolation of Ceredigion's acute services, but those problems would be hidden in a combined trust. I therefore expect the development of close collaboration between Ceredigion and acute services in other trusts. I shall in the near future discuss those issues personally with representatives of the Ceredigion trust and other local representatives.
In Cardiff and the Vale of Glamorgan, the proposal to split the Llandough hospital from community services now managed by Llandough NHS trust is entirely opposed to the principle of creating a single health service for each area. The way forward for Cardiff and the Vale of Glamorgan is the creation of a single integrated trust for the area—excluding Velindre, because of its specialist nature. However, immediately to create one trust would involve an operation of far greater complexity than any of the other mergers.
I have, therefore, reluctantly accepted that a two-stage process is necessary. It is important to give certainty to staff and management by setting a clear time scale for both stages. I intend to merge the University Hospital trust with the Llandough trust—including the community element—and to combine Cardiff Community trust with the University dental hospital. There will be speedy consultation on the proposal, but I am confident that it meets most of the objections to the previous proposal. My intention is that the merger will proceed on 1 April 1999. As soon as possible, I shall make a further announcement on the second stage.
The new NHS trusts to which I am giving the go-ahead are: North West Wales NHS trust; Conwy and Denbighshire NHS trust; North East Wales NHS trust; Carmarthenshire NHS trust; Swansea NHS trust; Bro Morgannwg NHS trust; Pontypridd and Rhondda NHS trust; and Gwent Healthcare NHS trust.
I intend to take a personal interest in the way in which the changes are made, and I will strengthen the role of community health councils which, with local authorities and local health groups, will help to create an effective and inclusive structure for the NHS in Wales.
Major benefits are available, for example, by bringing the Gwent health authority's three trusts together. Moreover, the merger in Gwent—unlike the merger in Cardiff—can be achieved immediately, as it is a far less complex operation. I am convinced that the future of Nevill Hall hospital is secure because of its key strategic position, but appreciate the fears that have been expressed in north Gwent.
I am requiring the new trust to state clearly how the pattern of services will be developed across hospitals in Gwent. Local authorities, hon. Members, and community

health councils and the new local health groups will have a chance to comment, and I hope that that transparency will ensure that the reconfiguration is seen as a new partnership in Gwent and not as a takeover of one hospital by another.
The same principles will be emphasised with every one of the new trusts. We are interested not only in the pattern of services, but in the nature of management and the way in which services are delivered. For example, I have more reason than most people to understand the local importance of Llandudno hospital, which is where, after an operation in 1950, I left my tonsils. Community links and expectations might suggest that Llandudno hospital should be linked to Ysbyty Gwynedd, but doing so would fail to provide the critical mass of acute services in north-west Wales that are essential to effective local care.
Llandudno will stay with Ysbyty Gwynedd, but the way in which it provides its services must respect local expectations in Llandudno and the surrounding area. I am therefore requiring Gwynedd Hospital NHS trust to consult Glan Clwyd District General Hospital NHS trust and other local partners, including the local authority and local health group, and report back to me on how those matters can be reconciled.
Mechanisms such as the one that I have proposed are the way in which we can ensure that there is proper co-operation in the best interests of local areas, in which the principles I have stated are inevitably in conflict with each other.
Similarly, the merger of the Llanelli Dinefwr and Carmarthen trusts is intended to improve patient care across the county. However, I understand also the fears in the Llanelli area and the strength of support for a hospital that local people have supported enormously strongly over many years.
I am determined that reconfiguration will not lead to the closure or downgrading of Prince Philip hospital. The hospital will not lose its accident and emergency unit or its magnetic resonance imaging scanner. I am requiring the new trust to state how it will meet those requirements, and the views of local hon. Members and other local partners will be sought to ensure that our intention becomes a reality.
Finally, I am aware of the concern that changes in patient flows as a result of creating a single new trust could damage services in Swansea. I shall hold Iecyhd Morgannwg health authority to its pledge not to allow patient flows to change because of reconfiguration. My officials will have the clear task of working with health authorities and the new trusts in as transparent a way as possible towards an improved style and quality of management in the new structures directed entirely at providing better patient care and respecting the needs of local communities.
It is central to the role of the new trusts that they should make themselves accessible to their communities and engage them in their decision making and planning, as our NHS White Paper requires. That is the only way in which to reassure communities about the impact of reconfiguration and to reap the benefit of better patient care that the changes are intended to achieve.

Mr. Nigel Evans: I welcome the right hon. Gentleman to his post. I believe that this is his first statement as Secretary of State for Wales. I am grateful


to him for giving me a copy of his statement earlier this afternoon so that I had an opportunity to read it. He may have other matters to divert his attention these days, particularly the battle with the hon. Member for Cardiff, West (Mr. Morgan), and his hopes to be parachuted into a position in the Welsh Assembly, but I hope that he will be able to get his head out of the clouds for long enough to give sufficient attention to those issues that need it, including the national health service.
We fully appreciate the fact that the health service in Wales needs special extra attention. The consultation document "Better Health, Better Wales" mentions on page 5 that health service provision and the health of people in Wales is poorer than in England and the rest of the European Community. There is no reason why that should be allowed to continue.
I applaud the work of the nurses, doctors and support services in the hospitals in Wales. They do a superb job and deserve our recognition, not just today but every day.
The people of Wales will want to know how the reconfiguration of trusts will improve services. Will it reduce waiting lists and waiting times? I am sure that the Secretary of State saw the Western Mail on 12 November, which said that more people were waiting 12 months and 18 months for operations in Wales. That is unacceptable and we need to ensure great improvements. Many people believe that there is more fiddling with waiting list figures than Stephane Grappelli has ever seen. The Western Mail article features the comments of Jan Williams, the chairman of the confederation, who welcomes extra money to tackle waiting lists, but believes that sustained improvements will need increased funding on a recurring basis. Can we have assurances that we shall get such continued extra money for the health service?
I am concerned about the comments of Dr. Dewi Evans of Singleton and Morriston hospitals on the scandal of youngsters having to wait for operations in certain specialties in Wales. Will the reconfiguration of the trusts ensure an improvement in the health service, particularly for our young people?
The Government have talked about the reconfiguration resulting in savings. Initially a figure of £10 million was mentioned, although that has changed to £7 million recently. Those who work in the NHS have grave suspicions that the savings cannot come simply from the reconfiguration and that the extra money will come from front-line services. We are concerned that if the savings cannot be made as the Secretary of State has outlined, he will have to turn his attention elsewhere in the NHS to secure them. We want to ensure that the front-line services are improved, not damaged, by the changes.
The Secretary of State has also said that he has not acted on all the recommendations initially, with particular reference to Powys and Ceredigion, which I applaud. When I was in Powys, I too listened to the concerns of many members of the public—the people who are on the receiving end of the health service in Wales. People were worried that the acute service would completely swamp the community-based treatment that they received. I am delighted that the right hon. Gentleman has listened to their concerns.
Yesterday, a statement was made on the millennium bug problem. The right hon. Gentleman did not mention it today, but as the changes in the health service will take

place in 1999—exactly when the millennium bug might affect hospitals that have not taken proper action—will he assure us that the problem will continue to be treated as a priority? The Audit Commission reported earlier this year that the treatment of the problem in the NHS was extremely patchy.
Will the right hon. Gentleman assure the House that people who live in rural areas will continue to receive the community services on which they have come to rely? He will appreciate that those people do not have adequate public transport to go to larger hospitals many miles away.
Will the Secretary of State reassure us that, in the reconfiguration, waiting list lengths will be tackled? I understand what he says about the geographical problem in Wales, but we must not allow those hospitals that he says will not be closed to be generally downgraded; the reconfiguration must not be used as an excuse to downgrade services. Will he assure us that there will be no downgrading of provision in, for example, the Nevill Hall hospital, which he mentioned?
The right hon. Gentleman referred to Swansea. That is where I grew up and where my family live, so I have particular reason to attend to what happens to the hospitals there. I remember that, when the emergency service in Singleton hospital was threatened with closure, there was an almighty outcry, even though extra provision was being made elsewhere. Will he guarantee that, even with the flows of patients between various hospitals in the area, that service will not be damaged?
If the Government paid as much attention to the real doctors in Wales as they do to their spin doctors—on whom they spend twice as much money as the Conservative Government did—the services would be much better in Wales. The right hon. Gentleman knows that there will be elections in Wales next year. Many people will wonder why, as it is only a few months until the Assembly takes responsibility for the health service in Wales, he did not delay his decisions on the reconfiguration and let the Assembly take them. The Assembly may want to look again at what he has announced today and make further changes, and that could be extremely expensive. He should remember that, in the elections to the Assembly, the Government will be judged not on their words, but on their deeds.

Mr. Michael: There was a good deal of knockabout in that contribution. The hon. Gentleman has a cheek to talk about parachutes. I have represented a Welsh constituency for 11 years and, before 1 took up other responsibilities, I spent four years as shadow Health Minister for Wales. I have been immersed in the politics of the Labour party and Wales for more than 30 years, but he had to go to Ribble Valley to win a seat in the House. I take it that he left his parachute outside the Chamber before he came in and had the cheek, as someone who represents an English constituency, to talk about the health service in Wales.
I suppose that we should take his contribution as a belated apology for the damage that the Conservative party did over 18 years to the health service in Wales. His recognition of the importance of nurses is also belated. I speak for all Labour Members in saying that we value the nurses, doctors and the other health service staff who have a variety of functions; they all contribute enormously to the quality of health care.
It is important that we do not become frozen in immobility because of the Assembly. I believe that the leader of Plaid Cymru, the right hon. Member for Caernarfon (Mr. Wigley), agrees with that. We must lay down foundations and make sure that structures are in place so that the Assembly will be able to call the health service to account, to examine the management of the health service and to look at the outcomes and the outputs that are important to the people whom we represent.
The proposals will help to reduce waiting lists and waiting times, and the hon. Member for Ribble Valley (Mr. Evans) should recognise that waiting lists dropped by 1,700 last month. The Under-Secretary of State for Wales, my hon. Friend the Member for Cardiff, Central, will have more to say next week to embarrass the hon. Gentleman further. The separation of elective and emergency work within the new trusts will help to tackle waiting lists.
The hon. Member for Ribble Valley was worried about the extent of savings, but the Pembroke-Derwen merger made continuing savings of £750,000 per annum—well above the estimates given of resultant savings. We can have some confidence in the estimates. I will talk to people who have concerns about achieving the savings and about the way in which they are fed back into health care. The hon. Gentleman seems to get most of his information from the Western Mail, and I can tell him that I will listen to those who work in the health service, including the representatives of Unison. They have genuine concerns about these matters—they do not want to score points in this Chamber.
The hon. Member wanted to know about the millennium bug. He must have been scraping the bottom of the barrel for something to say at that point. Yes, the changes will take place on 1 April 1999, and we are making sure that the millennium bug will not damage the emergency services and health services generally in Wales. We give priority to that matter. I have been a member of the Cabinet Committee that is emphasising the need for every organisation to be aware of the issue. If new IT systems are needed as part of the reconfiguration, they will be millennium compliant.
The hon. Member asked about rural areas, and I have recognised the need for flexibility. That is precisely the reason for the decision in Powys, and why I have recognised that the situation in Ceredigion is difficult, but must be addressed. Problems of rurality, sparsity, mountains and other matters cause problems in the provision of services in virtually every part of Wales. That is one of the issues that we are trying to address through the flexibility provided by the reconfiguration. I am glad that the hon. Gentleman noticed the geographical problems of Wales. I am not sure how long it took him to come to that conclusion.
I emphasised in the statement the answers to a number of questions that the hon. Member for Ribble Valley asked, such as the future of Nevill Hall, which I said should not be downgraded. I made it clear that in each of the trusts, there should be no asset-stripping of one hospital by another or any undermining of confidence, so that services are available where people need them. The ability to maintain those local services and different centres of provision will be strengthened, not weakened, by the way in which we have undertaken the

reconfiguration. I can assure the hon. Gentleman that it is all good news and that he can leave the Chamber cheering at the news that he has been given.

Mr. Win Griffiths: First, I pay tribute to the civil servants in the Welsh Office, and to the managers, medical staff and others at all levels in the health service in Wales for the immense efforts that they have put into the reconfiguration process, which has been incredibly important. It is estimated that it will save between £7 million and £10 million by the end of this Parliament. Given the small adjustments that have been made in individual proposals, will there be any effect on those savings? My trust was confident that it could do better in savings terms than the figures in the proposals.
It is very important that we get the message across that permanent savings from administration will go directly to patient care. Will my right hon. Friend confirm and underline that the future of hospital and community services in the health service in Wales will, in the near future, lie in the hands of local health groups, doctors, nurses, midwives and local authority representatives, who will have the job of seeing how hospital services fit into the new health service in Wales?

Mr. Michael: I join my hon. Friend in paying tribute to those people who are going through a difficult process, and who worked closely with him during his period as the Minister with responsibility for health in Wales. I repeat my tribute to my hon. Friend for the hard work that he undertook in difficult circumstances. It is always more difficult to start when one is clearing up a mess than if one is starting from a strong position. Frankly, the former is where we found ourselves 18 months ago.
I am confident that the adjustments will not cause a problem in relation to savings. In Powys, the health authority has given the assurance that the necessary savings can be effected in ways that it is happy to achieve itself. I am certain that the dismemberment of the Llandough trust in order to put it back together again in a couple of years as part of stage 2 would have been an expensive way of doing a job badly. I am confident that the savings will not be any lower as a result of the decisions on Cardiff and the Vale of Glamorgan.
We will look specifically at Ceredigion in light of our decision, but I hope that my intention can be carried through and that we can strengthen partnership and co-operation between Ceredigion and other trusts to make sure that difficulties are not caused. I underline the point that savings are to be diverted back into health care, and I am sure that all my hon. Friends want to see that happen.
Finally, I can give my hon. Friend the answer he is looking for in relation to community services. It is very important that there is a proper balance between hospital and community services, which must be integrated and complementary. My hon. Friend is right to stress that the future is in the hands of local health groups, which will bring a new degree of accountability at the most local level. That matches the developments that will take place in the coming year, when the overall strategic accountability will be in the hands of the new elected Assembly for Wales.

Mr. Lembit öpik: May I offer the Secretary of State and his Minister my profound gratitude


and that of my hon. Friend the Member for Brecon and Radnorshire (Mr. Livsey) and the people of Powys at today's decision? The people of Powys have worked so hard to protect the continued existence of Powys health trust, and have won a common-sense victory today. Does the right hon. Gentleman recognise that this will be regarded as an indication that, for once at least, Ministers have been willing to listen to the concerns of the public and to act accordingly—something that is extremely welcome? That will bring great cause for celebration to the professionals working in health trusts in Powys.
Does the Secretary of State agree that while this decision may not please everyone in Wales, few in Powys will be disappointed? Does he agree that it was somewhat mean-spirited of the hon. Member for Ribble Valley (Mr. Evans) to seek the negatives and to make irrelevant party political points at a time when it is important for us to recognise that the decisions have been altered according to the consultation process that involved effort on both sides? That process has led ultimately to a pleasing result in terms of the modification of the plans.
The Secretary of State mentioned the need for Powys to achieve savings, and that has been mentioned on a number of occasions. Will he accept my assurance that I and my hon. Friend the Member for Brecon and Radnorshire will honour the commitment to work with Powys health trust to ensure that those savings are found—recognising, none the less, that the process presents us with a further challenge that we must not avoid?
More broadly, there will be debates and concerns in other parts of Wales, especially about the financial savings that must be found. Does the Secretary of State agree none the less that the Powys decision should be regarded as an example of what can be done when parties listen and work together—[Interruption.]—when the public are genuinely consulted and, perhaps most importantly, when the public interest is put above party political concerns, in this case leading to the maintenance of a health service that is loved by the people of Powys and highly respected by all those who have cause to use it?

Mr. Michael: I welcome the hon. Gentleman's remarks. To those Conservative Members who mocked some of his points, let me say that I welcome his reasonable approach. This is the new politics: to disagree when there are things to disagree about, but to agree when we can agree. In particular, I would stress the importance of one thing that he said: it is a matter of integrity that he acknowledged the fact that there are difficult decisions for Powys Health Care trust to take in order to make the savings that will be necessary for it to deliver on its promises.
I have heard Labour party and trade union voices arguing in the same direction as the hon. Gentleman and the hon. Member for Brecon and Radnorshire (Mr. Livsey). I look to Members of Parliament, local authorities, trade union representatives and others to help to deliver on the promises that have been made. I am

convinced that, with a reasonable and co-operative approach, we can achieve an outcome that is satisfactory for everybody.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I have given some leeway to Front Benchers and to the former Health Minister in Wales, but I now appeal for shorter questions and answers, as we have other important business to cover.

Mr. Alan Williams: I accept entirely the logic of the proposals for Swansea, which reflect the consultation that was held in the area. Is my right hon. Friend aware that the new trust will start with an enormous problem, with the overhanging shadow of the £8 million debt that Morriston will bring? If the new trust is not to start in an atmosphere of cutting and holding back on developments, we must deal with the debt. Recognising that it should not have been built up in the first place, will he consider writing it off?

Mr. Michael: There are proposals to deal with the problem to some extent. A recovery programme is being set up, and my right hon. Friend makes a reasonable point when he says that the debt should not have been built up in the first place. The reconfiguration will help the process, but I recognise that the problem to which he alludes is extremely difficult. We will be conscious of it when we consider how the new trust is to develop its work.

Mr. Cynog Dafis: There is widespread cynicism in Wales about the reconfiguration exercise. People think that it has more to do with a pre-election undertaking than with actual need and the provision of a more efficient health care system. There will be widespread dismay at the failure to take the opportunities for improvements in health care delivery in mid-Wales— especially in relation to the integration of services—that were carefully described in the consultation process.
Will the Secretary of State guarantee that the development of services and of clinical excellence that has taken place in Ceredigion, and particularly in Bronglais general hospital, will be able to continue? Does he accept that accessibility is also vital, and that the royal colleges need to—and are in fact beginning to—understand that? May I warn him that any diminution in the status of Bronglais hospital in Aberystwyth or reduction in its range of services and specialties would evoke a furious public reaction in the area, compared with which what we have witnessed in Powys would pale into insignificance?

Mr. Michael: I agree that there is widespread cynicism in Wales. That is precisely why, when I took up my post, I delayed the announcement of the reconfiguration in order to examine the proposals and ensure that I would not be announcing something that I could not put my hand on my heart and say would improve patient care. That is my objective in today's announcement. That is precisely why the announcement is about not only lines on the map, but the way in which the new arrangements will be put into practice.
I would have hoped that the way in which I made the announcement would have set some of the hon. Gentleman's doubts to rest. He asks whether I can


guarantee that the development of clinical excellence in Bronglais will continue. The whole point of the way in which I referred to Bronglais and services in Ceredigion is that I recognise that there is a specific problem there. That problem would not have been helped at all by simply merging it with another set of problems at Powys Health Care trust: that would have been running away from the problem.
I fully intend to address the problem, and I will be quite happy to talk to the hon. Gentleman and to listen to any constructive suggestions about the future of the health service in his area. The reference to co-operation and partnership with other adjoining trusts is precisely about trying to find a formula that will protect the future of Bronglais.
I understand the hon. Gentleman's point about accessibility. It is not an easy situation to protect, but I am determined to do so, and I look forward to working with him, with those who work in the trusts and with other interested parties in the area. It is not my intention that there should be any diminution in the standard of care available.

Mr. Denzil Davies: Is my right hon. Friend aware that there will be considerable anger in Llanelli at the decision to abolish the Llanelli Dinefwr hospital trust and that the anger will be compounded by the fact that the decision was taken by a Labour Secretary of State? Is he further aware that there will be widespread cynicism about the consultation process, because all groups in my constituency—health professionals and others—were totally opposed to the Welsh Office plans? Is he finally aware that all his fine words about not downgrading hospitals will carry little credibility because there is real concern, as a result of the decision that he has taken, that Prince Philip hospital in Llanelli will be downgraded and we will lose our medical services?

Mr. Michael: I know and understand my right hon. Friend's passion for the health services in his area. I hope that he will help to ensure that nobody pursues the approach of either cynicism or promoting the belief that there is any threat to Prince Philip hospital. I have made it clear that that is not the basis on which the reconfiguration is proceeding. I have been absolutely explicit—I hope that he will pass my words on to those of his constituents who have expressed concerns—about the requirement on the trust, the board and officials at the Welsh Office to ensure that none of the dangers that he fears will come about.
I understand the fears and cynicism that have arisen from the way in which health service decisions have been taken over the past 20 years. Many of us have had worries about our local services. The whole point of making my statement in a clear and considered way, measuring each word, is to ensure that the changes that I have to accept as necessary to concentrate on health care are implemented in such a way that high-quality care is provided, but with a proper regard for factors such as the affection of people in Llanelli for their own hospital. I hope that that offers the reassurance that my right hon. Friend seeks.

Mr. Rhodri Morgan: I agree with 80 per cent. of the statement, but I want to ask my right hon. Friend about the two-stage reorganisation of the

trusts in Cardiff and the Vale of Glamorgan. We heard enough about two-stage reorganisation yesterday to last us a lifetime, although I understand that today's announcement does not involve any grouse moors or the resignation of any Tory Front-Bench spokesmen, however popular that might be in Wales.
How long does my right hon. Friend expect the period to be between the completion of stage one reform, with the two mergers that he has announced today, and the ultimate merger of the two newly merged trusts into one mega-trust covering the whole of Cardiff and the Vale of Glamorgan? How high will morale be among the top management, the clinicians and everybody working in the health service in the Cardiff and Vale of Glamorgan area when they work for two organisations with such a limited shelf life?

Mr. Michael: I accept that a two-stage reform is not ideal, but nothing else was on the cards from the beginning of the consultation, as my hon. Friend knows. I hope that not only will we have no grouse moors, but no grouses at the end of the process. I have made our direction clear, following much uncertainty in the health service in Cardiff and the Vale of Glamorgan. People suspected that we would have stage one and that stage two would never happen. I am determined that we shall have a short first phase, leading to the completion of the job as soon as possible. I will consult further on how quickly that can be done, so that a time scale can be produced that gives some certainty to clinicians and staff in the area.
It is only fair to point out that the complexities in the area, of which my hon. Friend is aware, include the moving of the accident and emergency unit from Cardiff Royal infirmary to the University hospital of Wales and a variety of other movements in the acute services in the area. We do not intend to dismember the Llandough hospital from community services, thus producing a mish-mash and pretending that that is a second stage towards a single trust. Instead, we will merge existing arrangements in a manageable first stage, which will quickly lead to a sensible second stage and the degree of certainty that my hon. Friend rightly suggests should be achieved.

Mr. Don Touhig: I welcome my right hon. Friend's statement as far as Gwent is concerned, because I believe that the single trust is the proper solution. However, I know that my hon. Friends have some concerns about that and I am sure that they will express them to him. Will he confirm that his decision will provide us with an opportunity in Gwent to shift resources from bureaucracy to patient care and how does he intend to ensure that that happens?

Mr. Michael: My hon. Friend is right: the purpose is to shift resources from bureaucracy into patient care by having only one level of bureaucracy and ensuring that services are available to people in appropriate and convenient locations. We wish to strengthen services in the northern half of Gwent, about which there has been some concern, and we want to ensure the safety and long-term security of Nevill Hall hospital. I am certain that the reconfiguration can achieve the improvement in patient care in Gwent for which my hon. Friend hopes.

Mr. Paul Flynn: I thank my right hon. Friend for his statement and I agree that the best


solution is to concentrate the strengths of the services into a single trust. All the alternatives would have meant that administrators would have been appointed unnecessarily, and bureaucracy would have been doubled or even trebled at the expense of patient care by doctors and nurses. Given what my right hon. Friend said about the problems in the north of the county, may I remind him that the area of Wales with the worst health record is a ward in Newport? The solution will help all parts of Gwent to save money and enjoy a stronger health service.

Mr. Michael: I am grateful to my hon. Friend for those remarks. He is right to suggest that we should focus on seeking to improve health care where it is worst, including wards in his constituency and areas in north Gwent. The purpose of the reforms is to ensure that everyone, wherever they live, has access to high-quality health care from acute and community services and from the complementary services of local authorities.

Mr. Alan W. Williams: I wish to express my disappointment with the statement as it affects my constituency. The policy of forced mergers of trusts that my right hon. Friend has inherited from his predecessor and my hon. Friend the Member for Bridgend (Mr. Griffiths) is mistaken, because mergers should be voluntary. What reassurance can my right hon. Friend provide for my constituents and people in Llanelli that services will be available in both areas and will not be affected by rationalisation?

Mr. Michael: I can understand my hon. Friend's disappointment, but I am not sure about the concept of voluntary mergers because that might mean leaving the management of trusts that may have been established on an unsatisfactory basis to choose whether to merge. The overriding consideration must be the need to provide the best quality of patient care, as I know my hon. Friend agrees. I am happy to give the reassurance he seeks that the quality and choice of care in his part of the new county area will not be downgraded, and I shall remind those who will run the trusts of the need to ensure that there is no asset stripping of one hospital for another. That applies equally to both sides of the combined trust.

Mr. Llew Smith: While I welcome my right hon. Friend's commitment to Nevill Hall hospital, people in Blaenau Gwent will still be angry about the statement. My right hon. Friend quoted the Royal College of Surgeons, but if he had quoted the local authorities, such as Blaenau Gwent, Monmouthshire and, even, Newport he would have found opposition to a single trust for the county of Gwent. The vast majority of general

practitioners in Gwent are also opposed. The community of Blaenau Gwent has some of the worst health problems in the United Kingdom, including heart and respiratory disease and cancers, and the people are terrified that they will again have an authority that will be unable to relate to and respond to their health problems.

Mr. Michael: I understand the concerns that my hon. Friend presents on behalf of his constituents. I accept that different voices have different views, but I mentioned the Royal College of Surgeons because it has argued for larger concentrations of acute services, which can cause problems for more localised services, unless they are a part of a combination. I have proceeded with the interests of his constituents and the services at Nevill Hall hospital in mind. I accept my hon. Friend's concerns for his local area, but I believe that the creation of the local health groups and a stronger voice for community health councils will be a way in which to achieve our intentions. I am happy to discuss with my hon. Friend and his colleagues the changes to community health councils, because they will be important to our scheme.

Mr. Huw Edwards: I remind my right hon. Friend that, when the previous Government introduced the trust system, they included no consultation whatever. The Government should take some credit for having a consultation process on this occasion. My right hon. Friend will know that I campaigned with my hon. Friend the Member for Blaenau Gwent (Mr. Smith) for a separate trust for north Gwent and I must express the disappointment of campaigners that my right hon. Friend has decided not to implement that. Will he give us an assurance that Nevill Hall hospital will be maintained as a district general hospital, that there will be no drift of resources to south Gwent and that the Government's commitment to combat social inequalities in health will work specifically in the interests of the people of north Gwent?

Mr. Michael: I am happy to give those assurances. Nevill Hall will continue as a district general hospital. As I indicated earlier, there must not be an exercise in asset stripping. My hon. Friend is right to point out that there was no consultation when the previous group of trusts was created, but we have listened, and I would be more likely to share the concerns expressed by some of his constituents if the trusts were to be of the type set up by the previous Government. We have made it clear that the trusts must be totally different, and must involve partnership and co-operation. They must provide an integrated health service in which there is no question of hospitals or acute services winning over community services, but, instead, complementing each other. I shall be happy to work through those issues with my hon. Friend and his colleagues as time goes by.

Business of the House

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): With permission, Madam Speaker, I shall make a statement on the business of the House. The business for next week is as follows:
MONDAY 7 DECEMBER—Second Reading of the Water Industry Bill.
TUESDAY 8 DECEMBER—Second Reading of the Road Traffic (NHS Charges) Bill.
WEDNESDAY 9 DECEMBER—Until 2 o'clock, there will be debates on the motion for the Adjournment of the House.
Opposition Day [1st Allotted Day].
Until about 7 o'clock there will be a debate on decommissioning and the release of prisoners, followed by a debate on tax. Both debates will arise on Opposition motions.
Motion on section 155 of the Finance Act 1998.
THURSDAY 10 DECEMBER—Estimates Day [1st Allotted Day].
There will be a debate on prison sentences and alternatives to prison sentences, followed by a debate on new deal pathfinders and pathways into work for lone parents. Details will be given in the Official Report.
At 10 o'clock the House will be asked to agree the winter supplementary estimates, the votes on account and supplementary defence votes A.
FRIDAY 11 DECEMBER—The House will not be sitting.
The provisional business for the following week will be as follows:
MONDAY 14 DECEMBER—Second Reading of the Greater London Authority Bill.
TUESDAY 15 DECEMBER—Until 7 o'clock, conclusion of Second Reading of the Greater London Authority Bill,
Debate on the Common Fisheries Policy on a Government motion
Proceedings on the Consolidated Fund Bill.
WEDNESDAY 16 DECEMBER—Until 2 o'clock, there will be debates on the motion for the Adjournment of the House, which will include the usual three-hour pre-recess debate.
Debate on the modernisation of the House of Commons.
THURSDAY 17 DECEMBER—Second Reading of the Scottish Enterprise Bill.
FRIDAY 18 DECEMBER—The House will not be sitting.
Subject to the progress of business, it will be proposed that the House will rise for the Christmas recess from Thursday 17 December until Monday 11 January 1999.

[Thursday 10 December:

Estimates Day [1st Allotted Day]—Class 1V, Votes 1 and 2: Home Office administration, police, probation, immigration and other services, England and Wales, and prisons, England and Wales, in so far as they relate to prison sentences and alternatives to prison sentences. Relevant reports: the Third Report from the Home Affairs Committee, Session 1997–98, on Alternatives to Prison Sentences (HC 486).

The Department for Education and Employment and Office for Standards in Education Departmental Report: The Government's Expenditure Plans 1998–99 (Cm 3910).

The Home Office Annual Report 1998 (Cm 3908).

Class 1, Votes 1 and 3: Department for Education and Employment: programmes and central services and Employment Service and Class X11: Department of Social Security, in so far as they relate to New Deal Pathfinders and Pathways into Work for Lone Parents. Relevant Reports: the Seventh Report from the Education and Employment Committee, Session 1997–98, Pathways into Work for Lone Parents (HC 646); and the Government's response thereto (HC 1122); the Eighth Report from the Education and Employment Committee, Session 1997–98, New Deal Pathfinders (HC 1059)and the Government's response thereto (HC 1123)

Sir George Young: The House is grateful for the business and for the dates of the Christmas recess, which are a sensible response to our suggestion that there was no point in bringing the House back after a non-sitting Friday for one or two days during Christmas week when we want to be busy in our constituencies.
On the Greater London Authority Bill, I am grateful for the right hon. Lady's response to my suggestion of allowing extra time for debate. Will the House be able to sit until midnight on that day so that debate is not duly constrained? May I repeat my request for sections of the Bill to be taken on the Floor of the House as they affect the constitution?
The right hon. Lady trailed a debate on modernisation of the House, not on a Thursday, but on a Wednesday. Can she confirm that the report on how we manage Thursdays will be published in good time for that debate? Does she recognise that Members have strong and conflicting views on that matter? Can she confirm that Members will be able to vote for a range of options, including the status quo, on a free vote?
On Monday, will the Prime Minister be making a statement on the Anglo-French summit, and will he be able to explain his increasingly isolationist language on European matters? When we debate tax on Wednesday, will the Chancellor try to make good his disappointing performance on the "Today" programme on tax harmonisation? Will he be able to tell us which United Kingdom businesses are being targeted by the working group on harmful competition, which is chaired by the Financial Secretary? Will the Chancellor explain what he meant when he signed a code to tackle harmful tax competition? Will he give the same messages in the UK that he gives when he is in Europe?

Mrs. Beckett: First, I can assure the right hon. Gentleman that we intend to suspend the rule and to allow debate until midnight on the first day of consideration on the Greater London Authority Bill. We hope that debate on the second day will conclude at around 7 o'clock.
Secondly, the right hon. Gentleman asked whether we would take sections of that Bill on the Floor of the House. We can discuss that through the usual channels, and I understand both the concerns of the right hon. Gentleman and his hon. Friends, and their anxiety to scrutinise the Bill thoroughly.
The right hon. Gentleman asked whether I expected the report on modernisation of the House of Commons to be published in time for the debate. I expect it to be published on Monday, leaving many days in which Members may consider it. He also asked about voting. It would be wrong of me to attempt to comment on how we might handle decisions when the report is not yet before the House. I am sure that the matter can be discussed through the usual channels, although if hon. Members wish to vote for the status quo, all that is required is that they reject any proposal for change. There will certainly be a free vote.
The right hon. Gentleman asked whether my right hon. Friend the Prime Minister would make a statement on the summit. I expect that my right hon. Friend will do so. As we have made clear, informal councils or meetings might not be followed by a statement, but we certainly expect the Prime Minister to make a statement after the summit. With regard to the observations of the right hon. Member for North-West Hampshire (Sir George Young) on the Prime Minister's stand, I feel that the right hon. Gentleman is drifting back in time. The Government are not isolationist; on the contrary, we seek, successfully, to put together alliances across the European Union, which is one reason why we—unlike the previous Government—were successful in lifting the beef ban, a lifting long promised by the Conservatives, but never delivered.
Finally, the right hon. Gentleman referred to my right hon. Friend the Chancellor of the Exchequer and the finance debate. I am sure that my right hon. Friend will speak about some of the issues that the right hon. Gentleman has raised. As for the targeting of UK businesses in any proposal under discussion, the right hon. Gentleman entirely misunderstands that matter. We have had many complaints—I am sure that the previous Government had many such complaints in their day—about unfair taxes and concessions elsewhere. United Kingdom businesses have complained to us, and my hon. Friend the Financial Secretary is addressing those complaints.

Mr. Tony Benn: Have the Government given any consideration whatever to making a statement about the information that came out casually yesterday that there has been a major change in Government policy towards the second Chamber? The House has been completely bypassed. Was the matter discussed by the consultative committee on which the leader of the Liberal Democrats sits? Is Lord Cranborne now an unofficial member of that committee, as part of the patriotic alliance? Will the hereditary peers who are elected be elected by proportional representation on a closed-list system, or will they be elected in the traditional hereditary manner of first past the bedpost?

Mrs. Beckett: As my right hon. Friend will be well aware, the Leader of the Opposition chose yesterday to publicise discussions that had been undertaken. If the matter was put casually before the House, that was not the doing of my right hon. Friend the Prime Minister. Indeed, had agreement been reached in the ordinary and customary way, it would have been properly announced to the House when we discussed the way in which the

Bill on the Lords would be handled. The right hon. Member for Richmond, Yorks (Mr. Hague) chose instead to publicise the matter before any formal announcement had been made about the handling of that Bill. That is a matter for him, but given the way that Lords are leaping off the Tory Front Bench even as we speak, I imagine that he regrets his handling of it.
My right hon. Friend also asked me about the general issue of the second Chamber and how widely the matter was discussed. I understand that it was not widely discussed because the relevant discussions were continuing. Attempts were being made to reach agreement so that the matter could be handled by consensus and on common ground, according to how the Government had said from the outset that they wished to handle it, if and where they could. That has been the Government's position from the beginning, but it was clearly not the position at least of some parts of the Opposition, and it is still not their position.
As for whether Lord Cranborne is an unofficial member of any coalition, I am not sure where he stands at present. Should the agreement be put in place, how the hereditary peers will choose who should continue in the transitional House until all hereditary peers go—the Government have said from the outset that that is the intention at the conclusion of the legislation—is, I am happy say, for another place to decide.

Mr. Paul Tyler: I have a more serious question about the events of the past 24 hours. Does the Leader of the House acknowledge that the sensible management of the business of Parliament and, in particular, of this House, depends to a considerable degree on mutual trust and confidence across parties? Does she agree that that will be especially true not only for the business that she has announced for the next few weeks, but in the new year? Has the leadership of the Conservative party assured her that that mutual trust can be restored and that, when those who appear to be speaking on behalf of the party—appropriate spokesmen—enter into an agreement in good faith, they will stand by it? Has she received assurances to the effect that the Conservative party will now agree in good faith to the assurances that it has given?

Mrs. Beckett: I share the hon. Gentleman's view that mutual trust and confidence are important in this place and that, if assurances appear to be given but the situation then changes, it shakes that confidence. However, I cannot tell the hon. Gentleman that I have received assurances of the sort that he suggests. I do not want to rub salt into any wounds, but it seems to me that such is the confusion that exists on the Opposition Benches that no one is in a position to give an assurance.

Mrs. Gwyneth Dunwoody: I know that my right hon. Friend is highly efficient, so will she use the extra time that she will undoubtedly find in the legislative process, as a result of those interesting and rapidly arrived at decisions, to establish a strategic rail authority? That would not only be widely welcomed by all our constituents, but would produce positive results for all the United Kingdom.

Mrs. Beckett: As my hon. Friend will appreciate and as I said a moment ago, there is such confusion that it is


a little hard to know what will happen. If, as seems possible, that agreement is adhered to, in particular in another place, we may well be able to introduce the strategic rail authority Bill, which will give not only my hon. Friend but many hon. Members considerable pleasure.

Mr. Oliver Letwin: Further to the question of my right hon. Friend the Member for North-West Hampshire (Sir G. Young), can the Leader of the House tell us whether, when the Chancellor speaks to the House about taxation on Wednesday, he can explain why the Financial Secretary told European Standing Committee B that she believed that our "domestic tax system is fully consistent with the principles of the code"—[Official Report, European Standing Committee B, 26 November 1997; c. 2.] that the committee that she has been chairing is studying, when it turns out that 10 of our domestic tax measures will have to be changed?

Mrs. Beckett: I am not familiar with the issue that the hon. Gentleman raises. I know that my hon. Friend the Financial Secretary is seeking the best possible outcome for the United Kingdom from the discussions on the tax code. No doubt, the hon. Gentleman will raise that matter in the debate next week.

Mr. Harry Cohen: Will my right hon. Friend arrange for an early statement on family leave? Is she aware that a commission reported recently to the United States Congress on family and medical leave, stating that it has a good effect on families and no significant effect on competitiveness? The Government have referred to parental leave in their programme, but unless there is some arrangement for payment that will be a hollow right for many people. Will she undertake to communicate that fact to the relevant Ministers?

Mrs. Beckett: I much respect my hon. Friend's strong feelings on that matter and take the point that a sensible balance between rights and the understanding and recognition of mutual responsibilities in the workplace facilitates competitiveness and economic success. He raised two slightly different issues. The first was family and parental leave; the Government have been discussing family leave in general rather than merely parental leave. Secondly, he mentioned a pay scheme and we are certainly some distance from that, although I understand the importance of his argument.

Mr. Nick Gibb: Will the right hon. Lady find time for a debate on early-day motion 56?
[That this House notes that from April 1999, 300,000 non-taxpaying pensioners and 330,000 other non-taxpayers will lose an average of £75 each because of the Government's decision to abolish the dividend tax credit; further notes that 80,000 of the pensioners affected will lose over £100 per year; considers that it is unacceptable that basic rate taxpayers and higher rate taxpayers are unaffected directly by this decision which only affects non-taxpayers, half of them poor pensioners, who by definition must be poorer than taxpayers; calls on the Government to act on the promise made to the House on 30th June when the Paymaster General stated 'I am aware of the growing anxiety among poorer

non-taxpayers who have been hit by the measure so I know that we need to make our position utterly clear as quickly as possible', Official Report, 30th June, column 175; calls upon the Government to now honour this pledge by announcing that non-taxpayers will be able to continue to reclaim a 10 per cent. tax credit from April 1999 in the same way as taxpayers who hold PEPs or ISAs will be able to do; and further notes that this is still a 50 per cent. cut from the current 20 per cent. dividend tax credit.]
It has been signed by Members representing all three main political parties and concerns the plight of more than 300,000 pensioners, who will lose on average £75 a year because of the Government's decision to end the repayment of dividend tax credits.

Mrs. Beckett: I am not in a position to allow an early debate on that matter, but I am sure that the hon. Gentleman will have heard me say in the business statement that there will be a debate on tax matters. He will be able to raise it then.

Mr. Dennis Skinner: Will my right hon. Friend confirm if there is to be a statement or a debate on the proceedings with which we have been deluged in the past 24 hours, that is, the demise of the hereditary peers? Although I, for one, want to see the end of the House of Lords, there is a delicious irony in seeing 750 hereditary peers sign their own death warrant-to-be, like the dead parrot, defunct and caput. In those circumstances, would it not be advantageous to introduce in the time that would be made available a strategic rail authority Bill, a food standards agency Bill and one or two other measures? The net result would be a benefit to the House and to the Labour party in particular.

Mrs. Beckett: I certainly accept my hon. Friend's strictures on the general handling of the issue. It is noteworthy that a most respected former Speaker of the House and other peers on the Cross Benches have put forward a proposal that commands support in another place. As my hon. Friend observes, that would mean that the Government could achieve a clear aim, namely, the removal of the right to sit and vote in another place on the basis of heredity. Indeed, we may well succeed in that aim faster than would otherwise have been the case. If the agreement can be implemented, we may well be able to introduce not only the strategic rail authority Bill but, one hopes, legislation on the food standards agency. Since the Conservative party has made so much of that latter measure, saying how important it is, I am sure that that would please Conservatives, too.

Mr. Christopher Chope: Will the right hon. Lady find Government time for a debate on early-day motion 69?
[That this House believes that the statement of the Secretary of State for Trade and Industry on 9th November, Official Report, column 14, that he has never been, and does not intend to be, involved in procuring or negotiating sponsorship deals for the New Millennium Experience Company is totally inconsistent with newspaper reports that he entered into discussions with S. P. and G. P. Hinduja in January with a view to persuading them to abandon support for a millennium project in the Midlands in favour of the dome at


Greenwich and met the Hinduja brothers on 6th October at the Department of Trade and Industry to discuss the dome and other trade and industry matters; and is of the opinion that the Secretary of State should now apologise for having misled the House and should give up his position with the NMEC immediately.]
It draws attention to the fact that the Secretary of State for Trade and Industry misled the House when he said on 9 November that he had never been and never would be involved in securing sponsorship for the New Millennium Experience Company. This afternoon, the right hon. Gentleman had the opportunity to explain and apologise for his actions on that day. In an answer to a very reasonable question from my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady), he did not deny the facts or that he had misled the House. He sought, however, not to apologise, but to ridicule my hon. Friend and, in so doing, he made a fresh and totally false allegation against Mr. Hinduja.

Madam Speaker: Order. It is perfectly in order for the hon. Gentleman to call the House's attention to early-day motion 69, but he should not use the colourful language that he is using, or introduce new charges. He has done perfectly well in putting down that early-day motion, but he should stick closely to its wording, of which I am well aware.

Mr. Chope: I am grateful for your guidance, Madam Speaker. You were here this afternoon when the issue was put to the Secretary of State for Trade and Industry and you heard his response. Will the Leader of the House demand that he comes to the House to explain his conduct? At the moment, he appears to be above the law.

Mrs. Beckett: I certainly cannot undertake to give the hon. Gentleman or his hon. Friends an opportunity to raise afresh a matter that has clearly been raised once already today. From the hon. Gentleman's remarks, it seems to me not that my right hon. Friend the Secretary of State did not deal with the matters raised, but that the hon. Gentleman does not like the answer that my right hon. Friend gave. I fear that that is not unknown in this place. It remains the position that my right hon. Friend does not procure or negotiate sponsorship deals. I understand that, in early October, he had a meeting with the Hinduja brothers to discuss several issues relating to the Department of Trade and Industry, but there is no record of any discussion of the millennium experience at that meeting.

Mr. David Winnick: Does my right hon. Friend accept that, if there was a statement on the hereditary peers next week, it would provide the Government with an opportunity to respond fully to the quite extraordinary—there is no other way to describe them—antics of the Leader of the Opposition? One would like to see the right hon. Gentleman respond accordingly. Is my right hon. Friend aware that, as far as one can ascertain, there is widespread Labour support for any compromise and practical solution that would deal with most of the hereditary peers? I welcome what appears to be an arrangement that would help the Government and

provide an excellent opportunity for both Houses of Parliament to move forward. It will certainly be appreciated in the country.

Mrs. Beckett: I am grateful to my hon. Friend and to all my hon. Friends who share the view that he expresses. I fear that I cannot undertake to find time in the near future to debate the developments of the past few days, although I agree that that might be an entertaining debate. Unfortunately, we are not here to enjoy ourselves, but to get on with legislative work.
One most noteworthy aspect of the events of the past few days is that the hypocrisy of the Conservative party has been completely exposed. Conservative Members have repeatedly claimed that the measure on Lords reform should not even be in the Gracious Speech, because it would take time from matters that are of far greater concern to the British people. On the other hand, we have made it quite plain that our chief interests in the Queen's Speech were indeed those other issues, such as health care, which are of far greater importance, but that we felt that Lords reform was a matter that had to be dealt with in its proper place. It is we who have been trying to find a way of not taking up excessive time to discuss the matter, although the proper time will, of course, be made available. Therefore. it is now crystal clear that it is Conservative Members who want to spend all their time discussing a matter which they say should not be a high priority.

Mr. Crispin Blunt: May I join my hon. Friend the Member for Christchurch (Mr. Chope) in calling for a debate in Government time on funding for the millennium dome? I ask that not least because it struck me that the original answer at Question Time was that the Secretary of State for Trade and Industry had not sought extra funding for the millennium dome from other sources. I would have asked the right hon. Gentleman directly whether the matter had been put to the Hinduja brothers at their last meeting, but I failed to catch your eye, Madam Speaker. The Secretary of State is a fairly slippery customer, and 10 minutes is a short time—

Madam Speaker: Order. The hon. Gentleman will withdraw that remark.

Mr. Blunt: I am sorry, Madam Speaker. I withdraw that remark. The right hon. Gentleman is capable of evading a point for 10 minutes of questions in the House, and he has shown his ability to do so. However, a full debate on the dome would not only allow that question to be properly addressed. but would enable us to ask the right hon. Gentleman to explain the extraordinary claim he made this afternoon, that the millennium dome would somehow create £1 billion-worth of economic growth for the United Kingdom.

Mrs. Beckett: The hon. Gentleman has raised the same issue as his hon. Friend the Member for Christchurch (Mr. Chope) and he will get the same answer. All I can add is that, as Conservative Members have of late spent so much time arguing that the House should devote itself to high-priority issues, the notion that we should spend a day debating the Conservatives' ridiculous accusations about my right hon. Friend the Secretary of State for Trade and Industry is quite ludicrous.

Mr. Dale Campbell-Savours: May we have a debate on the banking industry, especially the role


played by Lombard banking and National Westminster bank in inducing customers to invest in The Tanning Shop franchisee business, when the bank knew, because that business was one of its major customers, that it was collapsing? If it is possible to have that debate, will my right hon. Friend ask Ministers at the DTI to ask inspectors to interview Mr. Peter Stern, who is the NatWest franchise manager? He knows the whole truth and he should tell the whole truth, so that the bank learns the whole truth. It is his failure to tell the bank the whole truth that is costing franchisees all over the country millions of pounds.

Mrs. Beckett: I am sorry to hear of the concerns that my hon. Friend has raised and of the losses he has identified as being made. I understand that DTI officials are looking at those issues and that the matter may have been referred to the banking ombudsman. I believe that my hon. Friend may have secured a meeting with the Minister for Competition and Consumer Affairs, my hon. Friend the Member for Pontypridd (Dr. Howells). He is the relevant DTI Minister and I know that he will share my hon. Friend's concern and be anxious to ensure that anything that can be resolved is resolved. However, I fear that I cannot promise my hon. Friend that I shall be able to arrange a debate in the House on the matter in the near future.

Mr. Shaun Woodward: In the light of the right hon. Lady's remarks about faith and confidence in the House and given the comments that have been made today about the business yesterday, does she think it appropriate for an urgent debate to take place in which this House can discuss and debate the conduct of the Prime Minister? In the Queen's Speech debate, the right hon. Gentleman led the House to believe that he was keen to scrap hereditary peers at an early stage and made it a point of principle; yet, at the same time, through his offices and others in his party, he was making secret deals and negotiating how many hereditary peers could, through a Dutch auction, be retained in order to expedite the Government's business.

Mrs. Beckett: I do not think that the hon. Gentleman has been paying attention to what has been going on. My right hon. Friend the Prime Minister made it plain that it is a point of principle in the Labour party that an hereditary position should not be a qualification for sitting and voting in the other place and that we want to see that change at an early stage. It is clear that part of the purpose behind the discussions that have been held is indeed to make sure that that eventuality does occur earlier than might otherwise have been the case—in fact, I am beginning to wonder whether that is the Conservatives' real objection.

Mr. Tam Dalyell: Has my right hon. Friend had a moment to glance at the amazing, bewildering, breathtaking, fascinating and mind-boggling second report of the Select Committee on Scottish Affairs on "The Operation of Multi-Layer Democracy"? Not since Rip van Winkle, or at least since St. Paul was struck on the road to Damascus, has there been anything quite like it. Has she read paragraph 32, which states:
Two aspects of the way in which the constitutional reform is being implemented give us particular cause for concern. One is the belated addressing of the English dimension."?

Well, better late than never, but where on earth have our colleagues been all this time? Is it not about time that the House of Commons addressed itself seriously to what is actually happening to the constitution of this country and in Scotland?

Mrs. Beckett: I must confess that I have not committed to memory every word of the report to which my hon. Friend refers. I have a further confession to make: the connection he makes with Rip van Winkle escapes me for the moment, although I am sure that if I think about it afterwards, I shall realise what it is—I shall work on that. I can say only that I know and understand my hon. Friend's strong views about devolution, which he has held for many years. However, regardless of the evidence given to the Select Committee, the remarks made or opinions quoted, I understand that the report welcomes the Government's proposals overall.

Mr. Ian Bruce: I am sure that the right hon. Lady is aware that I asked her predecessor many times whether we could have a debate on the inordinate amount of time that Ministers take to reply to letters from Members of Parliament. She will probably also know that I put a series of questions to Ministers asking how long they took to reply to such letters. My questions were referred to a report that was published just before the summer recess. However, the report told us what had happened in 1997, not 1998—which is not satisfactory.
I draw the attention of the Leader of the House to a letter that I received from the Department of Social Security in response to a question about why pensioners in my constituency had been told that they would receive a guaranteed minimum income of £75 a week. After three and a half months, the reply eventually came that there is no guaranteed minimum income of £75 a week because people must have less than £3,000 in savings in order to qualify. Why must we wait three and a half months to discover that our constituents have been misled in that way?

Mrs. Beckett: I do not intend to sound as though I am treating the hon. Gentleman's concerns about answers to letters trivially. That is an important matter, and I know that all my colleagues do their utmost to answer correspondence as speedily as possible. However, as to the specific issue to which he referred, I take it that he was asking a rhetorical question as I am quite sure that the hon. Gentleman is much too intelligent not to have known the answer before he wrote the letter.

Mr. Andrew Miller: Has my right hon. Friend noticed the rather strident language that has been used today? Lord Pilkington described Lord Cranborne's deal as his "crowning glory", while the Daily Mail described the actions of the Leader of the Opposition as "treason". In light of those comments, will my right hon. Friend provide time for a debate about constitutional reform? Finally, in light of Baroness Strange's departure to the Cross Benches and the changing balance of power in the other place, can my right hon. Friend give an assurance that the Government will not lose their resolve to reform the hereditary peerage system?

Mrs. Beckett: I am aware of the remarks to which my hon. Friend referred. Every time one turns on the


television one learns that a fresh member of the Conservative Front Bench in the House of Lords has departed—no doubt as a vote of confidence in the party's overall leadership. Although I sympathise with my hon. Friend's request to have an enjoyable and amusing debate in what is normally a festive season, I fear that I cannot undertake to find time for it.

Mr. Peter Brooke: I thank the Leader of the House for her courtesy in responding to questions put to her by the Northern Ireland Select Committee about the powers of Select Committees in the devolved territories and remind her that we corresponded about that issue in July and November. Is the Leader of the House aware that the deadline for settling those matters is 1 February? Although we are making progress, I hope that that deadline is firmly in the Government's mind.

Mrs. Beckett: I am extremely grateful to the right hon. Gentleman both for his kind remarks and for the manner in which he has raised the issue. If by any chance the matter was not strongly in people's minds, I assure him that it will be from now on.

Mr. John Cryer: The Leader of the House will be aware that the chief fire officer for London proposes to cut five fire pumps across Greater London. That proposal comes on top of the removal of 14 fire pumps in the three years since the docklands bombing. It is also proposed to cut one of two pumps in my constituency—a move that will be resisted every inch of the way. The legislation governing the fire service, the Fire Services Act 1947, is woefully out of date and in need of review. Could we have a debate or at least a statement about that matter?

Mrs. Beckett: As my hon. Friend has correctly identified, that legislation has been on the statute book for some time. Responsibility for provision of the fire service rests locally with the fire authority, but my hon. Friend will be aware that the approval of my right hon. Friend the Home Secretary is required if such an authority wishes to reduce the number of stations, appliances or fire-fighting posts. I understand that no application has been received to date from the London fire and civil defence authority in respect of Hornchurch fire station.
As a result of the announcement by my right hon. Friend the Deputy Prime Minister yesterday, the fire service standard spending assessment for London should increase by almost £10 million—or 3.8 per cent. That may assist to some degree with the difficulties identified by my hon. Friend. I take his point about the concern regarding those issues, but I fear that I cannot offer to provide a debate or a statement before Christmas.

Mr. Gareth R. Thomas: Bearing in mind the current confusion in the ranks of the Conservative party to which my right hon. Friend correctly referred, can she confirm whether the progress of the European Parliamentary Elections Bill—which was supported by a majority of hon. Members many times last night—will continue to be impeded by hereditary peers in the other place?

Mrs. Beckett: My hon. Friend asks a very interesting and pertinent question. I am grateful for the opportunity

to put on record Labour Front Benchers' appreciation of the devotion to duty shown by many of our hon. Friends on the Back Benches who toiled through the Division Lobby on many occasions last night. I share my hon. Friend's hope that we are well on the way to disposing of the Bill. It is not yet entirely clear what attitude will be adopted in another place—whether as a consequence of the potential agreement or otherwise—but it is not impossible that we may finally be able to dispose of the matter in a manner that allows the efficient conduct of elections. That seems to me to be common sense.

Mr. Desmond Swayne: The right hon. Lady's answer to the question from the hon. Member for Linlithgow (Mr. Dalyell) was no less extraordinary for the fact that I drew her attention to the report at business questions last week. On that occasion, she replied that she did not read The Herald of Glasgow. So that we may be ready for next week's business—particularly Wednesday's business—will the Leader of the House ask the Chancellor of the Exchequer to be prepared to explain why he is now so ready to use the veto on tax harmonisation measures when he signed up to that agenda by acquiescing in "The European Way"?

Mrs. Beckett: I remind the hon. Gentleman that last week he asked me to comment on a leak reported in The Herald, not a Select Committee report that was published only today. I am sure that he has been in the House long enough to know that it would have been wrong for me to pre-empt the publication of a Select Committee report.
As for his remarks on tax harmonisation and the views of my right hon. Friend the Chancellor of the Exchequer, it is a constant source of astonishment to me that Opposition Members forget that the only taxation powers given up were those surrendered by the Conservative Government under the Maastricht treaty and on other occasions. For example, we could not reduce value added tax on fuel any further than 5 per cent. because of an agreement made by the Conservatives in government. Opposition Members also complain frequently about the use of the qualified majority vote. I remind the hon. Gentleman that no Labour Government ever gave up the veto: that was the Conservatives' doing.

Mr. Andrew Stunell: Will the Leader of the House arrange for the Secretary of State for Defence to make a statement about the Gulf war veterans who claim that they may have been affected by depleted uranium while on active service in the Gulf? Will she draw the Secretary of State's attention to the particular importance of that matter, bearing in mind that Ministry of Defence police have raided the homes of some veterans in the past 24 hours, apparently in an attempt to recover evidence and stop that claim proceeding?

Mrs. Beckett: I am not familiar with the hon. Gentleman's allegations, but I have no doubt that they will be drawn to the attention of my right hon. Friend the Secretary of State for Defence. I am aware that there has long been discussion about the difficult issue of illnesses suffered by many Gulf war veterans. The Minister of Transport, my right hon. Friend for Hamilton, North and Bellshill (Dr. Reid), devoted much time and sympathetic attention to the matter in his previous post as Minister for


the Armed Forces. I am not familiar with the immediate issues raised by the hon. Gentleman, but I shall draw his concerns to the attention of my right hon. Friend the Secretary of State for Defence.

Mr. Tony McNulty: First, may I thank my right hon. Friend for announcing the dates of the Second Reading of the Greater London Authority Bill, and welcome the publication of the Bill today? Will she resist as far as is practicable any scrutiny of the Bill on the Floor of the House, rather than Upstairs? It needs detailed scrutiny, which is far better done elsewhere.
Secondly, will my right hon. Friend resist the fatuous trivialisation of the issue dealt with at Prime Minister's questions yesterday in terms of patriotic alliances? Will she be assured that, whether it takes one year or two years, as long as the end result is that we get rid of all hereditary peers, this party, which has waited 90 years to do it, will wait a little longer?

Mrs. Beckett: My hon. Friend is entirely right. The clear wish of the Government, and of the people who elected us, is to make a long, long-awaited reform in another place. Anything that brings that about will be welcome. If it brings it about more quickly, all the better.
I hear what my hon. Friend says about the Greater London Authority Bill. We will consider the issues with care. I can assure him that the Government will discuss through the usual channels the best way of handling the Bill, because we all want it to be properly scrutinised. We shall attempt to get agreement about how that can best be done, in whatever way those discussions take place.

Mr. Paul Flynn: When can we debate early-day motion 1?
[That this House enthusiastically supports the Government's proposal for a £75 guaranteed minimum income for pensioners; notes that about a million pensioners entitled to income support do not receive it; and urges that the guaranteed minimum should be implemented for all by raising the basic pension to £75 per week in 1999 without a means test.]
The amendment to it reads:
[Line 3, leave out from 'it' to end and add 'congratulates the Government for honouring its commitment to uprate the state pension at least in line with prices; applauds the extra help given to all pensioners through the new winter fuel payments, reductions in VAT on fuel and the restoration of free eye tests; believes that the Government is right to give the highest priority to the poorest pensioners; further congratulates the Government on establishing pilot projects to encourage pensioners to claim those benefits to which they are entitled; and looks forward to the extension of this initiative, in partnership with local authorities and voluntary organisations, to the rest of the country.']
It supports enthusiastically the many beneficial measures introduced by the Government to improve the income of pensioners, but also sadly notes that, according to recent answers by the Government, up to 1 million pensioners will not receive the guaranteed minimum income of £75, principally because they regard claiming income support as claiming a handout?
Many of those pensioners have worked their entire lives without claiming any handouts or any welfare whatever, and they rightly say that if the level of the basic pension had been increased since 1980 according to the level of inflation, as the contributions that they made over 50 years increased by the level of inflation, the basic pension would now be not £66 a week, but £90 a week. Is it not right that we should say to those pensioners that they have earned the £75 on their basic pension? Would not that be the most dignified and best-value way of giving it to them?

Mrs. Beckett: I know of the huge amount of work on social security issues that my hon. Friend has done over the years, and of the great concern that he has shown. I can assure him that the Government whole-heartedly share his wish that the poorest pensioners, who in many cases are the poorest because during their working lives their earnings or their pension arrangements were such that they could not save, should receive a guaranteed minimum income.
I entirely share my hon. Friend's view—I think that I am right in my interpretation of his final remarks—that it is hugely important to encourage such pensioners to claim their entitlement and not to feel that they are discouraged from doing so. If, however, my hon. Friend was suggesting that massive increases should be made across the board to the basic pension, I understand and sympathise with the good will that lies behind that suggestion, but it is a much more difficult matter to give substantial increases on the basic pension, including to people who have—as so many now have, as a result of the scheme introduced by the last Labour Government—substantial second pensions.

Mr. Crispin Blunt: On a point of order, Madam Speaker. I am sure that the Leader of the House would not want to mislead the House, even inadvertently. I thought I heard her say, in answer to a question, that the Labour Government had not conceded the veto in any areas. She should, of course, be aware that the treaty of Amsterdam, which was taken through the House and signed by her Government, conceded qualified majority voting in no less than 14 areas. I am sure that she will want to put the record straight.

Mrs. Beckett: With your permission, Madam Speaker, I shall reply to that point of order.
I certainly did not intend any misinterpretation to be put on my words. The point that I was making, as I am sure the hon. Gentleman is well aware, was that it was a Conservative Government who breached the important principle of whether or not everyone should enjoy a veto. Now that the issue of qualified majority voting is in place, thanks to the actions of the Conservative party, of course there are occasions when it seems sensible, in the national interest, that it should be used. It remains my view that it is quite accurate to say that no Labour Government gave up the veto: it was the Conservative Government who gave up the veto, and it is about time the Conservative party stopped making such a fuss and trying to pretend that we are culpable.

European Union

[Relevant documents: Developments in the European Union, January-June 1998 (Cm. 4152); The Commission's Work Programme for 1999: the policy priorities (EU Document Number 12841/98); The Commission's Work Programme for 1999: new legislative initiatives (EU Document Number 12840/98); Minutes of Evidence taken before the Foreign Affairs Committee on 1st December, HC42-i.]

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Robin Cook): This debate gives the House its traditional opportunity to debate the issues under discussion at the forthcoming European Council in Vienna. It may be of assistance to the House if I outline what those topics will be. Such is the commitment of the hon. Members who have stayed till this hour that I am anxious to be of as much assistance to them as I can.
On the first morning the Council will approve the employment guidelines for 1999 and discuss how Europe can pursue policies to boost jobs and tackle unemployment. In the afternoon, we will examine progress on the Agenda 2000 dossier, reform of the common agricultural policy, modernisation of the structural funds, and the maintenance of budget discipline.
There will also be discussion on the debate on the future of Europe that was launched during the British presidency. This discussion will examine how we can ensure that decisions within the European Union are taken as close as possible to the peoples of the European Union in line with the principle of subsidiarity.
In the evening, there will be a discussion on enlargement, which will focus on a review of the Commission's report on the preparations by each of the dozen candidate countries.
Chancellor Klima of Austria, who will chair the European Council, visited London last week when he outlined that agenda. At his press conference after his meeting with the Prime Minister, Chancellor Klima said, in answer to a question:
We will talk maybe only one minute about tax co-ordination.
Ever since he said that—or for the past two weeks—public debate about Europe in this country has been about little else but taxation. Today therefore provides the House of Commons with an excellent opportunity to demonstrate leadership of that public debate by exploding the myths and mischief that have been peddled as facts for a fortnight.
Ghost stories about bogy men can be very entertaining for children, but the electorate are entitled to be treated as adults when we debate our relations with our closest neighbours and our most important trading partners.

Mr. William Cash: rose—

Mr. Cook: I see a bogy man.

Mr. Cash: The Foreign Secretary said that decisions, especially with regard to matters such as taxation, should be dealt with on the principle of

subsidiarity, and decisions made as near to the people as possible. The Government continually say that there is no constitutional bar to economic and monetary union. Will the right hon. Gentleman explain how they can make such an assertion, given that taxation clearly lies at the heart of economic and monetary union? When all the statements made by Oskar Lafontaine and others indicate that that is on their minds, why do the Government deny that taxation is on the agenda?

Mr. Cook: Of course, fiscal policy—the degree of the Government deficit—is highly relevant to monetary union. It was the hon. Gentleman's Government who agreed at Maastricht to tight targets on fiscal policy. We see no reason why those commitments on fiscal policy, given by hon. Members on the hon. Gentleman's Front Bench, necessarily require any country in Europe to have the same rate of taxation as any other country in Europe.
The best way of helping the hon. Gentleman and others to overcome fears of bogy men is to remember that we are not alone. Not just Britain but many other member states will oppose the harmonisation of tax rates. Yesterday the Italian Finance Minister told the Financial Times that harmonisation of corporation tax would be
untimely, questionable and above all hardly feasible
and that it
would be wrong in any event.
Yesterday the Prime Minister of Spain spoke out against what he called the "dumbing down" of tax harmonisation, and opposed a single rate of direct tax because
it would be a recipe for inefficiency".
There is no majority for the harmonisation of tax rates in Europe, never mind the unanimity that would be required for action. Nor will the need for unanimity change. That would require all members of the European Union to agree on a change to qualified majority voting on tax, and most member states will not agree.
As so much has been made of this debate over the past week, let us look at the record on tax harmonisation in Europe. The greatest harmonisation of tax rates adopted by the European Union was under the previous Conservative Government—the harmonisation of value added tax agreed by the then Conservative Chancellor Lord Lamont. It provided that, throughout the European Union, there would need to be a minimum standard rate of 15 per cent.
If the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) intends to attack tax harmonisation as wrong in principle, perhaps he would be good enough to share with the House what objections he raised in the Cabinet of which he was a member when it agreed to harmonise rates of VAT. There has been no change, and no proposals for change, in the harmonisation of VAT, since the election. Indeed, the only substantial change in VAT since the election is that the Government have cut the VAT on domestic gas and electricity bills which the last Government introduced. Those powers to vary the rates will of course continue. Only those who are out of touch with the EU would think otherwise.
So much for the past; as for the present, let me set out the Government's position. Britain will vigorously support the interests of British trade and investment throughout the single market by constructive engagement. There cannot be a Member of the House who has not been


lobbied by an industry in his or her constituency about unfair tax loopholes, state aids or special tax privileges in a country with which that industry is in competition. Many of those tax breaks are now under review in a working group chaired by a British Treasury Minister. That is a good example of British leadership where we believe European co-operation on tax would benefit British industry and jobs.

Mr. Jim Marshall: I am grateful to my right hon. Friend for giving way on the point about British leadership in that particular field. I refer to British leadership in another field, which he did not mention when he referred to the agenda for the Vienna Heads of Government meeting—the common foreign and security policy.
Continental Europe is alight with views about what the Government and my right hon. Friends the Prime Minister, the Foreign Secretary and the Secretary of State for Defence mean in respect of a new EU defence policy. I quote my right hon. Friend the Secretary of State for Defence:
We are not talking about a standing European army. We are not talking about removing defence from the control of national governments. And we must not do anything that would undermine NATO, which will remain the cornerstone of European defence and security".
I know what we are not talking about. Perhaps—not at this moment but at some point in his speech—my right hon. Friend will tell the House and continental Europe what we are talking about.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. Before the Foreign Secretary responds, may I say to hon. Members that we have had two very wordy interventions? The custom is that interventions should be brief, rather than mini-speeches.

Mr. Cook: I am glad that I have given my hon. Friend the opportunity to make his point, although I am not sure that it naturally arose from the passage on which I was addressing the House. He asked what we are exploring with our French partners, and with other partners throughout the EU. We are exploring how we can make decisions within the common foreign and security policy more effective and more rapid, and how we can ensure that there is a better transmission between the security policy decided by the Foreign Ministers of the EU and the defence policy that we implement through the North Atlantic Treaty Organisation.
We have been clear about the fact that we do not see that as in any way weakening NATO. On the contrary, we would hope that the initiative that we are taking on European security would strengthen the effectiveness of security policy in the EU and the European identity within NATO.

Mr. Deputy Speaker: I am sorry to interrupt the right hon. Gentleman again, but I should remind him that he should have been addressing the Chair, just as much as his hon. Friend.

Mr. Cook: I am justly rebuked, Mr. Deputy Speaker, and shall make a point of addressing the Chair. If you would allow me to return to the trend of my observations—

Mr. Oliver Letwin: rose—

Mr. Cook: The hon. Gentleman will no doubt have an opportunity to intervene later.
I was outlining the fact that we would vigorously support the interests of British trade and investment, wherever they were served by co-operation on tax. Where there is that British interest, we will support it. Successive British Governments have tried to get a level playing field on excise duties so that British spirits have fairer competition in their export markets. I pay tribute to the previous Government, for once. They also pressed for more harmonisation of export duties, and they were right to do so.

Mr. Crispin Blunt: I am grateful to the right hon. Gentleman for giving way on the issue of harmonisation. Hans Tietmeyer has said:
A European currency will lead to member nations transferring their sovereignty over financial and wages policy as well as in monetary affairs. It is an illusion to think that states can hold onto their autonomy over taxation policies.
Does the right hon. Gentleman agree or disagree?

Mr. Cook: I have already made it perfectly clear that I do not accept that becoming a member of the single currency—if that were something that Britain were eventually to become—would logically involve a transfer of decision making on taxes, still less on wages policy. There would need to be harmonisation of fiscal policy and budget deficit, but that would not require us to have common tax rates. It has not required common tax rates throughout the United States, which also operates within a single currency.
Not only Britain, but many other member states, still insist that direct taxation is a matter for the nation state. There is neither any proposal, nor any prospect of a proposal, for harmonisation of income tax in the EU. Neither Britain nor many other member states believe that there is any case for a European rate of corporation tax. Even the President of the Commission, which alone can initiate any proposal, has said that
income tax, corporation tax, social security … are sovereign, national matters and will remain so.
We need to have a debate about tax and Europe that treats British voters as adults. Where there are limited proposals for co-ordination on tax rules which are of benefit to Britain, we should support them. Where there are proposals that would damage Britain, we will oppose them, but for the rest of my lifetime, and that of the right hon. and learned Member for Folkestone and Hythe—whoever manages to outlive the other—the member states of the EU will continue to have tax systems which remain distinctive, even sometimes eccentric.
Germany has a special tax on coffee. I cannot see the French, with their famous affection for coffee, swallowing that one. France has a special 30 per cent. tax allowance for journalists. I do not imagine that other countries will want to copy it, but it could be the one measure which, at a stroke, could convert the British press to enthusiastic support for tax harmonisation.

Mr. Letwin: In the light of his remarks about treating the British public as adults, will the Foreign Secretary explain why the Financial Secretary to the Treasury did not treat the members of European Standing Committee B as adults when she told us:
We believe that our own domestic tax system is fully consistent with the principles of the code."—[Official Report, European Standing Committee B, 26 November 1997; c. 2.]


The right hon. Gentleman rightly told us that the Financial Secretary chairs the group that is working on it, but 10 of the measures will involve changing our tax system.

Mr. Cook: If I may correct the hon. Gentleman, the 85 measures at the back of the report that went to the Economic and Finance Council this week are being examined by the working group. That does not imply that the working group has taken a view on any of those 85—far less on the 10 that affect Britain, and even less on the five within that 10 that concern United Kingdom, as distinct from Gibraltar, issues. We shall look carefully at those issues as the working group continues its task.
If we are serious about tackling unfair tax loopholes and tax breaks in other countries that distort the market and are to the disadvantage of our industry, we should be prepared—openly and robustly—to look at those areas where other countries may have criticisms of us and where we are confident that we can rebut those criticisms.

Mrs. Gwyneth Dunwoody: Will my right hon. Friend give way on that point?

Mr. Cook: I will give way, then I must move on.

Mrs. Dunwoody: Does not that mean that we may not always be able to maintain some rates of taxation that are radically different from those of other nations? We must occasionally assume that, as part of the negotiations, we will be required to abandon British taxation.

Mr. Cook: Perhaps I may correct my hon. Friend. The working group is not examining tax systems, tax rates or tax rules. Under examination are the special, privileged tax breaks that some countries have used unfairly to attract investment, which does not reflect the competitiveness of the general economy. We are confident that we can assert that we will not have such tax breaks in Britain.

Mr. Patrick Nicholls: Will the right hon. Gentleman give way?

Mr. Cook: If the hon. Gentleman will forgive me, I must make progress with my speech. I am sure that he will catch my eye later.
The real agenda for Vienna shows Britain's success in influencing European priorities. Last December at Luxembourg we secured employment guidelines that reflect Britain's strategy of getting people back into work by increasing their skills. We have successfully retained the broad thrust of that strategy in the new guidelines for 1999. We have also secured some improvements. In particular, we have secured a new stress on gender equality, which reflects our commitment to ensuring that opportunities for work are open to both men and women.
We shall continue to make progress on our objective of ensuring that the principle of subsidiarity is put into effect across all decisions of the European Union. We hope to reach agreement in Vienna that the protocol on subsidiarity of the Amsterdam treaty will be brought into effect early, even though the treaty as a whole has not yet been ratified by all member states. We shall receive at

Vienna the first annual report on the implementation of subsidiarity. Both those steps take us further towards our goal of a Europe in which decisions are taken closer to the people.
Britain's objective in the discussion on Agenda 2000 will be to keep on track for its conclusion at a special European Council next March under the German presidency. We welcome the commitment that has been given by the new German Government to keep to that timetable. On Sunday, I shall join Foreign Ministers to discuss Agenda 2000 in advance of the Vienna Council. Progress so far on the three main elements of Agenda 2000 is in line with British interests.
On the common agricultural policy, we welcome the Commission's proposal for a cut of 30 per cent. in beef intervention prices; a cut of 20 per cent. in cereal prices; and a cut of 15 per cent. in milk prices. Collectively, the price cuts add up to a saving for the British consumer of £1 billion a year, which is a saving of £84 for the average household budget.
On structural funds, we support efforts to streamline the present seven objectives into three. Two thirds of all structural fund spending will remain concentrated under objective 1, and our success in securing new agreed regional boundaries should ensure that Britain continues to get good support from objective 1, with three new areas qualifying: South Yorkshire, Cornwall and west Wales.
On budget discipline, we welcome the broad consensus that there should be no increase in the ceiling of the European budget. We shall continue to impress on the Commission and the Council that the budget ceiling should remain a ceiling and should not become a target.

Mr. Nicholls: Does the right hon. Gentleman realise that one of the unfair tax breaks that attracts investment into this country is the comparatively low rate of corporation tax? In the light of what he said, how does he propose to resist moves from other countries that want our corporation tax to be at the same rate as the equivalent tax in their countries, so that the so-called unfair tax competition is eliminated?

Mr. Cook: I was unwise to give way to the hon. Gentleman, who plainly does not understand what is under review by the working group on the code of conduct. The rate of corporation tax has nothing whatever to do with that working group.

Mr. Nicholls: Yes, it does.

Mr. Cook: The code of conduct has nothing to do with the overall rate. It deals with those countries that provide specific, targeted exemptions to attract privileged industries to their country in unfair competition with other countries. For that reason, this country has nothing to fear from a rigorous examination of the problem. If Conservative Members were to acquaint themselves with the truth of what is actually under discussion in the European Union, they might not feel so threatened.
Before the hon. Member for Teignbridge (Mr. Nicholls) intervened, I was referring to budget discipline. I assure the House that my right hon. Friend the Chancellor of the Exchequer and I have made it plain at successive Council meetings that there can be no question of reopening negotiations on the British rebate. In its recent financial


perspective, the Commission admitted that, even after the rebate, Britain continues to make a higher net contribution per head than other member states that are in a better position to pay. In those circumstances, we see no case for reopening negotiations on the British rebate.
It will, of course, not be possible to fund the enlargement of the European Union within a fixed budget unless we can reduce spending within the existing member states. It is vital that the European Union maintains its momentum on the reforms in Agenda 2000 to match the preparations that the candidate countries are making for membership.
The Vienna Council will review the Commission's report on the preparations in each of the dozen candidate countries. The Commission identifies two or three candidates whose progress on preparation has been disappointing, but the overall picture is positive. For the first candidate countries, screening has now been completed in 17 chapters of European law, and substantive negotiations have been opened in seven. If we can maintain that momentum, by the end of the German presidency we shall have commenced negotiations in half the chapters of European law. That would be good progress, and would demonstrate the strength of the arrangements for enlargement that Britain established during our presidency.
Britain continues to be the firmest ally of the candidate countries in the debates on enlargement. I was the only Foreign Minister of any of the major member states to attend last month's accession process with the candidate countries. That strong support is warmly acknowledged whenever I visit any of the candidate countries. Their good will for Britain is in our national interest, because they will soon be full voting members of the European Union.
I do not underestimate the real difficulties in securing the biggest ever enlargement of the European Union. Nevertheless, I firmly believe that the problems of enlargement are much less important than the benefits. There could be no more valuable prize than a united, stable, democratic and prosperous Europe.
Britain has left its mark on the major issues that will be on the agenda at Vienna.

Mr. Roger Casale: My right hon. Friend rightly says that we should not lose sight of the fact that the enlargement of the European Union is an historic opportunity for Europe. Does he accept that it is also an historic opportunity for Britain to show clear leadership in Europe by ensuring that countries that want to accede to the EU are ready to join, and that the EU is itself ready for accession to take place? This is the moment for British leadership to come strongly to the fore.

Mr. Cook: I entirely agree with my hon. Friend. I believe that Britain has shown that leadership in the past 18 months. We have pressed for the successful launch of the accession process, and at all the Council meetings we have constantly spoken in support of enlargement. We are keen to ensure that the Agenda 2000 dossier is completed by next spring, so that we can match the real efforts that are being made by many of the candidate countries. All around central and eastern Europe, there are improvements in good governance, changes to the market economy and improvements on trade. That is a direct

reflection of the commitment of those countries to achieving membership of the European Union. We should respond to that action within Europe.
Britain is, of course, demonstrating leadership. Our leadership is shown in the step-change that the Government have made in our relations with our European partners. A key part of that step-change is a much greater partnership between Ministers and their opposite numbers throughout the European Union. It is now routine in European business for Britain to take the initiative along with one or more of our partners.
My right hon. Friend the Prime Minister has just made a declaration on employment jointly with Prime Minister Aznar of Spain, and early next year we will hold the first of our new regular summits with Spain. My noble Friend Lord Simon has launched an initiative on boosting enterprise with his French opposite number. My right hon. Friend the Secretary of State for Trade and Industry is engaged with the Minister for the Chancellery in Gerhard Schröder's office to promote a common approach to a broad range of policy issues.
I have agreed with Joschke Fischer on a structure of regular meetings between ourselves, and between our European Ministers. We are nearing completion on a British-German initiative on human rights. Yesterday, my right hon. Friend the Secretary of State for Defence and I travelled to Paris to meet our counterparts jointly, to explore how we can work together more closely on our ideas for the security of Europe.
In parallel with that increased partnership with Ministers in European countries, we are demonstrating the step-change in our relations with Europe by strengthening our diplomatic team throughout Europe. Last week, I announced that there would be 33 more staff at our embassies in the European Union. That will mean more commercial attachés to promote British trade, more labour attachés to promote our dialogue with social partners throughout Europe, and more desk officers to support them in the European command in the Foreign Office. That constitutes a new investment in our relations in Europe—a good investment, because this Government are determined to make those relations work.
In the past week, we have seen an example of our success in making those relations work for Britain: both the Agriculture Council and the European Commission voted to lift the ban on the export of British beef. We were, of course, able to achieve that result only because of the majority voting that the Conservative party insists on regarding as merely a threat to Britain. Nothing illustrates more effectively than that success the contrast between the present Government and their predecessor. The last Conservative Government launched a war on Europe over the beef ban; they lost that war. They surrendered without securing the sale of a single sausage.
The consequences of that war, however, were worse than mere failure. It provoked the maximum resentment of Britain, and produced the minimum respect for it. Britain is now respected as a leading partner in Europe. Even before we go to Vienna, the agenda for that summit demonstrates Britain's influence. My right hon. Friend the Prime Minister and I will travel to Vienna confident that we shall be able to secure conclusions that are in Britain's interests.
In any other European country. the strength of that country's government in Europe would be a matter of national pride. An eve-of-summit debate in any other European country's Parliament would express unity in support of the nation's interest in a successful summit.

Mr. Michael Howard: Paradise!

Mr. Cook: The right hon. and learned Gentleman may say "Paradise", but I do not expect what I have described to happen tonight. I fear that, if this debate runs true to form, we are doomed to a succession of speeches demonstrating the maximum division over our European policy from Opposition Members who, I suspect, would secretly prefer seeing the European summit to end in disarray that was bad for Europe to seeing an agreement that was good for Britain.
I do not really expect the Government to secure agreement from the Opposition on our European policy tonight. That would be too much to hope, given that the last Conservative Government could not secure agreement either. But, as long as the Conservative party insists on regarding Europe only as a threat, it will be unable to offer Britain a Government who can seize the opportunities of membership of the European Union.
Europe is our largest market, and buys half our exports. Europe's strength means that we have more clout in trade talks than Britain could ever have on its own—and the more we are seen to have influence in the capitals of Europe, the more respect Britain has in capitals throughout the world.
This Government recognise the tremendous opportunity that Europe represents for Britain, and in Vienna we will again demonstrate that we are a Government who can take full advantage of that opportunity.

Mr. Michael Howard: This is a significant debate, and the Vienna summit will be a particularly significant summit.
It has become crystal clear in recent days, even to the most blinkered observer, that the European Union is at a crossroads. We now face pressure on all fronts to move towards the goal that the German Foreign Minister has declared to be his objective: a single European state. One currency, one tax policy, one employment policy, one defence policy, one legal area, one state.
There is a great march towards a single European state, and the British Government will have to respond to it. It is not something that the Government can fudge. This is the moment when the new Labour project collides with the real world. The time has come at last for the Government to stop talking about hard choices and start making some.
The omens are far from encouraging. At the recent summit in PÖrtschach, the Prime Minister had an opportunity to say no; instead—in the words of an authoritative British source—he decided to go with the flow. If he continues to go with the flow in Vienna, it will be disastrous for Britain and disastrous for Europe.
The decisions made in Vienna during the Germany presidency in the first half of next year will set Europe's course for the early part of the next century.
This should constitute an historic opportunity to ensure that Europe responds to the needs and wishes of its peoples. With nearly 20 million people out of work across Europe. job creation should be the number one priority. With the institutions of Europe being seen as ever more remote from the people of Europe, genuine subsidiarity should be high on the agenda. With the countries of central and eastern Europe desperate to cement their political and economic freedoms by joining the European Union, the requirements of enlargement should inform every decision that Europe now makes.
By their actions in Vienna, Europe's leaders will be able to provide answers to some fundamental questions. Are we to have a Europe of nation states, or will the process of European integration continue indefinitely? Will we be part of an outward-looking, free-trade Europe, or part of a fortress Europe? Will Europe take the route of genuine subsidiarity, or will it move yet further from its citizens? Will it be a high-tax or a low-tax Europe, a competitive or an uncompetitive Europe, a job creator or a job destroyer?
Since their election, all too many of Europe's left-wing Governments have already provided the answers to those questions. The tragedy for Britain is that, so far, the British Government have been content to go with the flow. It is now time for British Ministers to tell the British public where they stand.
Britain is, after all, in an ideal position to take a principled stance. Ministers should know what policies are best for Europe, because they have seen them work in Britain. Ministers in a country that, during the last Parliament, witnessed stronger growth than took place in any other major European Union country should know which economic policies are required to foster prosperity, because they saw them work in practice. Ministers in a country that, by 1997, had a lower unemployment rate than any other major European Union country, and a higher proportion of the working-age population in work than any such country, should know what policies are required for job creation, because they saw them work in practice. Ministers representing a country whose citizens believe in co-operation and free trade, but who are proud of their nation and do not wish it to be submerged in a single European state, should know precisely when to call a halt to further integration.
The British Government should therefore be putting a case for British principles—British Conservative principles—the free market, low taxes and less interference from Brussels. Alas, they are not doing so. Indeed, they are not arguing for any principles at all. Time and again, they are content to nod through whatever suggestions are put before them by other countries. When it comes to proposals from Europe, new Labour just goes with the flow.
That process has continued long enough. It is time for the Government to be straight with the British public. Before Ministers travel to Vienna, there are at least six key areas on which they need to explain where they stand.
First, Europe's agenda on the harmonisation of taxes is becoming increasingly plain. Finance Ministers of the countries holding this European Union presidency and the next have made it clear that tax harmonisation follows


directly from the introduction of the single currency. The German Finance Minister has said that it is a primary objective of Bonn's EU presidency.
We are already aware of plans to harmonise corporate taxation. Now the Commission is preparing to publish suggestions for a common VAT regime. It has made it clear that, as an intermediate step, it wants to extend its scope and to review exemptions, which would clearly put the UK's zero rates at risk.
According to Commissioner de Silguy, that could "logically" lead to the introduction of VAT on food. The same commissioner has called for the extension of qualified majority voting on taxation issues. When asked recently whether harmonisation could include personal taxation, he replied, "Why not?"
At the very moment the Foreign Secretary was making reassuring noises to the Select Committee on Foreign Affairs on Tuesday morning, there was a call from Germany and France for the abolition of the veto on taxation.

Mr. Casale: Will the right hon. and learned Gentleman make clear which type of tax he is objecting to—indirect taxes such as VAT, which are part and parcel of completing the single market and on which his Government introduced harmonisation to complete the single market; or direct taxation, which is not on the negotiating table now, or for the foreseeable future? Which is he talking about—indirect or direct taxes?

Mr. Howard: If the hon. Gentleman wants to intervene, he should at least do me the courtesy of listening to the speech because, as I have said, those taxes are indeed on the agenda; Commissioner de Silguy has said so in recent days.

Mr. Robin Cook: If the right hon. and learned Gentleman is objecting to VAT being, as he puts it, on the agenda, could he clear up what he said in the Cabinet in 1993, when the then Chancellor of the Exchequer agreed to harmonise VAT rates throughout Europe?

Mr. Howard: The Foreign Secretary knows full well that it is country of origin-based VAT that is objectionable. That was effectively put off the agenda under the previous Government. It has come back on to the agenda under the present Government. That is what is objectionable and what the present Government's position is unclear about.

Mr. Cook: I am very sorry: I do not know whether the right hon. and learned Gentleman was at the Cabinet the day it discussed that matter in 1993. The previous Government agreed that there would be a minimum standard rate of 15 per cent. throughout the European Union, and that there should be no more than two lower rates, of which the bottom one would be at least 5 per cent. That is the only agreement that has ever been made on harmonisation of tax rates in the history of the European Union. Did the right hon. and learned Gentleman object to it, and if he did not, would he please spare us this humbug?

Mr. Howard: The right hon. Gentleman knows full well that that agreement did not in any sense put the zero

VAT rates in this country at risk. It is the country of origin-based regime on VAT that puts zero tax rates at risk, and we are entitled to know what the Government's position is on that and those other issues.
The Government claim that tax harmonisation is "not the way forward" and that
no-one is proposing any change in VAT',
but when we examine the small print in their documents, we find that their commitment to resist tax harmonisation is limited to personal tax rates. There is no commitment to resist harmonisation of the range of taxation that does not fall within that narrowly defined category.
When they are behind closed doors, the Government's actions belie their words. First, they sign a code of conduct on business taxation, under which they undertake not to engage in so-called "harmful tax competition". Then they endorse a socialist manifesto—indeed, they apparently drafted it—that calls for further efforts to avoid so-called harmful tax competition. Finally, this week, we have been told that Ministers will not be vetoing plans for a withholding tax, despite the damage that they would do to the City of London, and that they will be signing up to measures forbidding tax breaks for industries, including tax breaks that they themselves have introduced during the relatively short period that they have been in government. So Ministers say one thing in Britain and do another in Europe.

Mr. Giles Radice: The right hon. and learned Gentleman mentioned zero rating of VAT. Has he noted that there are six member states with zero rating and that, for it to be removed, there has to be unanimous voting? It does not seem likely that there will be unanimous voting when six countries have zero rating, so the point that he is making is not really serious.

Mr. Howard: It is an extremely serious point when the Foreign Secretary assures the Select Committee on Foreign Affairs that matters are not on the agenda and, as he speaks, the Finance Ministers of France and Germany indicate that they are on the agenda. As we have seen in the past, when Germany and France agree on something within the European Union, they tend to get their way.
With such behaviour in mind, is it any wonder that the French Finance Minister confidently predicts that Britain will be
won round to tax harmonisation by the end of the German presidency",
that the Commission President says that Britain has already accepted the principle of co-operation on tax rates, and that European Commissioner Monti says that the UK is "fully on board" on the issue?
Let the Government answer clearly: why have they already signed up to the principle of tax harmonisation? Precisely which "non-personal" taxes are they prepared to see harmonised? Is it true that they intend to refuse to veto measures on withholding taxes; and will they propose new measures to outlaw tax breaks for particular industries?
The second issue is no less crucial to Britain's future. It was raised by the hon. Member for Leicester, South (Mr. Marshall). The Foreign Secretary indicated that he was going to deal with it in his speech. We are still waiting for a comprehensive reply.
The House was not given the courtesy of a statement on the outcome of the informal summit at Pörtschach, but following the usual off-the-record briefings, the press reported that, to prove their Euro-credentials, the Government were planning to table new proposals on the future of Europe's defences.
The German Foreign Minister has made his view on that issue clear. He thinks that
one day, foreign and defence policy will … have to become community tasks",
so he thinks that the European Commission should decide whether and when British forces should be committed to combat.
The Conservative party has an equally clear view. We believe that the British Government should continue to decide whether and when British forces are committed to combat. We believe that NATO should remain the bedrock of our security and that any European defence identity should operate within NATO.
What is the Government's view? When addressing a British audience through their mission statement, they promised to base Britain's security on NATO, but when abroad, they sing a different tune. The Prime Minister told the New York Times that the European Union needed to be able to act militarily "on its own" when the United States was not so engaged, and he told the North Atlantic Assembly that Europe needed "genuine military operational capability".
When the issue was raised with the Secretary of State for Defence last week, he refused to clarify it, so Ministers have a second chance today. Do they support the idea of a European Union military capability—yes or no? Would they support the abolition of the Western European Union, or its merging into the EU—yes or no? If the WEU is to be abolished and a European military capability is to be based on the European Union, where does that leave Norway, Turkey and Iceland, which are members of NATO but not of the European Union? Where does it leave the new members of NATO, who will become members in April, but who are not yet members of the European Union—Hungary, Poland and the Czech Republic?

Ms Claire Ward: Will the right hon. and learned Gentleman explain how the views that he has just mentioned can sit comfortably with the views he expressed some time ago in the 40th anniversary special supplement of Crossbow. In that magazine, when he was a practising barrister rather than a Member of the House, he said:
Eventually, indeed, the aim might be a European air force and joint units could be a first step towards that objective.
Does he agree with that statement now?

Mr. Howard: The hon. Lady has gone back a long way. I am delighted that she is such an assiduous reader of Crossbow. The previous Government made it clear that we had no objection to a European defence identity within NATO, but that is what the Western European Union is there to provide. It is the future of the WEU which is at the heart of this debate.
Ministers are playing an extraordinary game. After Pörtschach one senior civil servant remarked that it was
refreshing but a bit unnerving
to have a Prime Minister launching a major policy debate
without knowing where it's going to end up.
When that debate concerns Britain's future security, such an approach might be considered rather more unnerving than refreshing. The North Atlantic Treaty Organisation has been extremely effective in keeping the peace over the past 50 years. It is disgraceful that Ministers are now prepared to put that at risk, not because they think that there is anything wrong with it but simply because they want to curry favour with some of our European partners.
Thirdly, we now learn that the European Commission is working on proposals for a unified criminal system with a European public prosecutor to whom each state's prosecution chiefs would ultimately be answerable. Initially, the proposals have been concerned with the fight against fraud in the European Union. The Conservative party has been at the forefront of calls for Europe to deal with such misuse of taxpayers' money. However, we would not support any extension of that work in the direction of a unified criminal system across the EU.
Ministers claim that such proposals are merely part of a discussion paper. They used to make similar claims about tax harmonisation until we discovered that they had apparently already signed up to the idea. The Conservative party can today give a categoric assurance that we will not support further moves towards a unified criminal system in Europe. Can the Government give that assurance too?
Fourthly, both France and Germany have made it clear that they support much higher public spending in Europe. What is the view of the British Government? When addressing British audiences they claim to support fiscal control in Europe. Once again, there is a yawning gap between their rhetoric at home and the reality of what they endorse while abroad. At Pörtschach, the Prime Minister was reported to have signed up in principle to a multi-million pound spending package. The Euro-socialist manifesto that Labour endorsed, and indeed claims to have drafted, contained similar plans and called for a "new culture of regulation".
Is it any wonder that many observers are claiming that the differences between the German SPD—the Social Democratic party—and the Labour party are far smaller than is often assumed in public debate.
Fifthly, Europe is facing vital decisions on the extent of future integration. The German Foreign Minister believes that the creation of a single European state is the
decisive task of our time.
He wants to turn the European Union into one entity under international law with a common constitution. The Conservative party believes that Britain should be in Europe, but not run by Europe. What is the Government's view? When giving interviews to the New Statesman the Foreign Secretary informs us that
Maastricht was a high water mark of integrationism".
When seated round the discussion tables of Europe at Amsterdam, his party signed up to an extension of majority voting in 15 areas and a year later it endorsed a Euro-socialist manifesto calling for "increased international integration". Which of the Government's


two contrasting faces—for domestic consumption or for presenting to our European partners—is the real face of the British Government?

Mrs. Dunwoody: I understand the right hon. and learned Gentleman's worries. As someone who negotiated the Labour party's involvement in the Euro-socialist manifesto over four different European parliamentary elections, I can assure him that such was the magnificent and careful use of language that all those documents contained no commitment to anything of any kind.

Mr. Howard: I am sure that the hon. Lady is absolutely right. In the days when she drafted the documents for European parliamentary elections, what they contained mattered very little because there were few left-wing Governments in the European Union. The trouble now is that the document matters greatly because 13 of the 15 Governments are left wing. That is why we have to take the document seriously and that is why its content is so alarming.

Ms Ward: Perhaps the right hon. and learned Gentleman should take some lessons from the statistic that he has just quoted. The fact that 13 members of the European Union have what might be described as left or left-of-centre Governments might suggest that that is the right way forward.

Mr. Howard: The trouble is that in the past this country has seen the effect of the policies that those Governments are now pursuing so actively and vigorously. Those are the very policies with which the present British Government are prepared to go along, moving with the flow.
I want to talk about the extent to which the moves to a deeper Europe put a brake on enlargement. On 10 November substantive negotiations were opened at ministerial level through the accession conferences, involving the six first-wave applicants. We now learn that European Commission officials are stating "in private" that the target date for the first wave of EU enlargement is slipping to "after 2005". Hungary and Poland in particular have expressed concern at the continuing delays. The Polish President is reported to have strongly criticised the European Union for spreading myths and stereotypes about candidate countries as an excuse to delay their entry into the EU.
What is the Government's view? Publicly, the Government have given their support to the enlargement of the EU—we heard that from the Foreign Secretary a few minutes ago. In Europe, they continue to support further integration which will set back the process of enlargement still further.
The Government have not been open with the British public on any of those issues, but nowhere has Labour's unprincipled stance been as stark as on the single currency. Almost alone in Europe, the Labour Government have simply refused to explain exactly what the single currency will entail. The other countries of Europe do not share those inhibitions. The German Chancellor refers to the euro as
an important step on the way to European integration.
The Austrian Foreign Minister says that it represents a
major step in the political process of European integration.

Commissioner de Silguy says that the single currency should be the
driving force of closer political union.
In Britain, the Government make no such claims. With the vast majority of British people opposed to such integration it is not hard to see why.
As on tax harmonisation, on steps towards a European Union army and on the proposals for further integration, the Government are simply unwilling to tell the British people the truth. Instead, they seek to divorce the constitutional impact of the single currency from its effect on the economy. They refuse to admit that the two are inextricably linked and that a policy of abandoning our control of economic and monetary policy has significant and constitutional implications. They are scarcely prepared to admit that the EMU project is about economic and monetary union, not simply about a single currency, momentous a question though that is.

Mr. Tam Dalyell: Does the right hon. and learned Gentleman feel the slightest bit uneasy at having sat for all those years in the same Cabinet as the right hon. and learned Member for Rushcliffe (Mr. Clarke)?

Mr. Howard: Not at all. My right hon. and learned Friend and I go back a very long way. We have been friends for a very long time and we agreed on far more things than we disagreed about.
Nations control their economic and monetary policy because it is in the interest of their citizens that those decisions be taken according to national needs. By saying that it is a question of when, not whether, we join economic and monetary union, the Government are intent on signing away in perpetuity our right to decide those vital matters for ourselves. Ministers claim that the constitutional implications are irrelevant. How will they explain that to British workers thrown out of work because European interest rates, set with the needs of all of Europe in mind, are too high for Britain; or to households facing an inflationary boom if interest rates are too low? How will they explain to British voters that their votes will be powerless to change those policies because the decisions will no longer be made in Britain?
It is, of course, easy to understand why the Government, given their record, are tempted entirely to remove matters of economic management from the domestic political arena. After 19 months in office, they have already generated the headlines produced by every previous Labour Government: interest rates up; taxes up; unemployment up. It is therefore easy to understand why they no longer want such questions to feature in our general elections. But what would be the point of having general elections if the parties were unable to stand on differing economic programmes?

Mr. John Cryer: If, as the right hon. and learned Gentleman seems to think, EMU is wrong in principle, why does not the Conservative party rule it out for ever?

Mr. Howard: I am saying that those are relevant questions to be taken into account. They are not matters completely to be put to one side, as the Government pretend, by uttering the mantra that there is "no constitutional bar", as though that were enough to make any further discussion totally irrelevant.
The truth is that the management of our economy is not some side issue for Ministers to ponder in their spare time, but the primary function of a modern Government. How can removal of control of economic decision making from the House not be a weighty matter to consider in the context of economic and monetary union?
The fact is that—on the single currency, on tax harmonisation, on defence matters, on European economic policy, on judicial co-operation, on European integration and on enlargement—new Labour is trying to be all things to all men. It tells the British people what it thinks the British people want to hear, and then signs what the other countries of Europe want it to sign.
As Europe lurches to the left, Labour's only goal is not to be left out. Instead of standing up for Britain's interests, it goes with the flow. Labour is unwilling to express clear views on the matters because its views are not fixed. It is unwilling to explain its principles because it has no principles to explain. Instead, for the sake of a quiet life, it intends to avoid debate in Britain, while being carried on the left-wing tide in Europe.
There is an alternative agenda. We could have a Government who fought for the Europe in which we believe—who fought for free trade, low taxes, deregulation, job creation and a Europe that truly works in the interests of its citizens. Alas, all the signs are that the Government are not prepared to do any of those things. Instead they will go with the flow. Britain and Europe will be the poorer in consequence.

Mrs. Gwyneth Dunwoody: When I listen to debates on Europe in the House, I sometimes feel that one should call down Chinese curses on both Front Benches. The reason is terribly simple: I believe that the United Kingdom electorate really do have the right to know exactly what is happening within the European institutions.
Unfortunately, our debates on Europe have now become almost set pieces, in which one side is prepared to say, "Your Government did everything wrong" in response to the other side, which is busily saying, "Our side intends to do everything right." I have been an hon. Member long enough to understand that such an approach to an important subject is not unusual. However, we have now reached such a stage in discussions on development, particularly of a monetary control system which will determine the United Kingdom's future for many generations to come, that we might be able to put before our constituents a rather clearer picture of what is involved.
I have just returned from Brussels where—following the dictates of my Ministers, who assured me that I would have a completely different attitude once I had gone—I returned to the haunts of my youth. I should say that, occasionally, I did actually live and work in Holland, in Belgium and in France. I am one of those strange people who do occasionally speak foreign languages. I also do not find that my physical presence in Brussels affects my political view one small iota. Perhaps it makes my view even worse, but it certainly does not change my attitude.
I think that we should now be saying that we have sufficient evidence to put before the British people about the implications of what is being proposed. We should

say to them, "Talk about the report of the Court of Auditors", which, for the third time, has been unable to approve the accounts. The report describes in considerable detail straightforward fraud, although we have enough crooks in this country to understand the implications of that. People will be attracted where there are large sums, and it is not really surprising to discover that large institutions are unable adequately to control the amounts of money flowing through them.
We should, however, at least be saying openly now what we think of as subsidiarity and what we accept as central control. Ultimately, those are the only things that really matter. If we do not have a clear view of what policies are to be moved from the House and dealt with in European legislation, we shall never explain the political implications of doing so. The move towards a common currency must inevitably take with it a very clear commitment to a common taxation policy. I do not understand how anyone can pretend that that is not so. Some people would say that that consequence is not only sensible, but normal and, indeed, desirable. At least let us be reasonably outspoken about it. Let us say very clearly what the implications will be.
If we agree to measures, as we have done in the past, that bring with them a very considerable transfer of resources, let us say, "Fine; but that does not mean that we accept that there must be a common tax base or a common attitude towards taxation of particular industries. There will also be instances in which, for one reason or another, we wish to retain total freedom of action." The debate is not being framed in those terms. Too many people are already being given the idea that the debate can be thought of in highly superficial terms: "It would be nice if we had a common currency, because you won't have any difficulty changing your money when you want to go on holiday." I see some artificiality in that argument.
Do we really want a situation in which decisions are taken about major industries in a way that we cannot control? Let us take a small instance, involving an industry that I happen to know about, although it is certainly not one of the most important. If the British authorities decide to give specific taxation advantages to the film industry to encourage a local industry—to attract to Britain those who write and who act in British film productions that normally would have been made elsewhere, sometimes in Ireland but most usually in the United States—are they to be told in future that doing so is unfair discrimination because it is an industry that must have an absolutely flat taxation base right across the European Union? If so, fine; let us argue it out. However, let us not pretend that that is not the ultimate aim of many of the proposed changes.

Mr. Tony Baldry: Has not the hon. Lady received an equal number of representations from United Kingdom industries concerned that there should be a "level playing field" with other member states, but complaining about the ways in which other member states subsidise their industries? Does it not logically follow that, if one has a single market, one has to ensure that there are rules of fairness that apply throughout that market, which otherwise will become distorted, often to the disadvantage of UK companies?

Mrs. Dunwoody: That is exactly the theory on which many people have operated for many years. That was why


we were told that there had to be the changes that we have already accepted. My experience of business, unlike the hon. Gentleman's, is that it will come and moan when it thinks that it can get some taxpayers' money, and will proceed in the manner that it thinks will benefit shareholders when it can operate without any constraints on its behaviour. I am, therefore, not entirely surprised when people complain to me about alternative industries and alternative countries.
I am saying something different—that the United Kingdom Parliament has a duty to tell the electors that when we talk about Euro money, we are also talking about Euro taxation and the ultimate aim of common bases. It does not matter whether it is taxation, industry aid or a long-term commitment to specific budgets; we are talking about common aims. I hope on some occasion to raise the inequities, absurdities and hypocrisies of the transport policies that we have been discussing this week in Brussels, because it is clear that there is a dichotomy in many institutions. The European Commission claims to be concerned about CO2, emissions, yet it pushes hard for ever larger lorries to be allowed free access throughout the European Community. We should not allow that to go unobserved.
Both Front-Bench teams are failing to serve the populace well. They should tell the people in simple terms that within the next year and a half, there will be a concentrated campaign, funded largely by European Community money—of which we pay a large part—to try to persuade us that our future inevitably lies in a Euro monetary system that will have its final decisions made in another country and another system, which is not answerable, does not respond to its own monetary controls and does not meet with the agreement of its auditors.
That will have considerable implications for the British people. The major car firm in my constituency is owned by a large German company that has not only failed to give my constituents undertakings that there will be jobs well into the new century, but has said that it intends to move those jobs elsewhere. One of my rail freight firms has considerable difficulties. It wants to use freight paths across Europe and before long, it will face large national monopolies that are anxious to keep out competition.
I know what the problems are. I want a counter—I do not think that it will happen in the next two years—to the sophisticated, expensive and one-sided debate that we shall have about monetary control. I am sad that the House of Commons does not appear to be leading that.

Mr. David Davis: This is the first time that I have spoken in the House about Europe since I stood down as Front Bencher on the subject. I am a great admirer of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). I suppose that I was taking her advice early about trying to bring a cool, analytical approach to examining the Government's policies and strategies of the past year. I suspect that I ought to take that advice more than most, because I was probably a recipient of one of her Chinese curses when I was on the Front Bench.

Mrs. Dunwoody: Not just one.

Mr. Davis: Many Chinese curses.
Having watched the Government at work for 18 months, I am reminded of the old adage that the easiest way to create a Euro-sceptic is to find a Europhile and send him to the Council of Ministers. That is what happens to Governments during their time in office. In 1979, the incoming Conservative Government were broadly more tolerant towards Europe than the outgoing Labour Government. Something similar happened in 1997. The situation did not last in 1979; I doubt that it will last in 1999.
The Foreign Secretary has told us that Labour's strategy in the past 18 months has been to distinguish itself from the openly tough-minded approach of the previous Conservative Government by adopting an overtly Europhile approach. The present Government's strategy appears to be to demonstrate a willingness to make concessions up front in the hope of gaining more in return. I do not think that that is a misrepresentation.
During my three years as a European Minister, I attended 100 or more negotiating meetings, from small meetings of junior Ministers up to European Councils. I watched the other European countries play against each other as well as against us. My comments relate not just to our relationship with Europe. I saw a fierce competition of national interests wrapped up in communautaire language. I also watched the institutions continually promote a rising tide of European federalism, supported by a shifting alliance of the various member states. I never saw a concession given with no attempt to get something in return.
I started by doubting the strategy of volunteering concessions in the hope of eventual reward, but I waited to see whether I was wrong. I am afraid that I was not. Since the election, we have seen the ineffectiveness of the strategy, with concession after concession on our part, but gains that were non-existent, long overdue or trivial.
At Amsterdam, there were concessions on the social chapter, the giving up of our veto in 15 areas, the Schengen agreement, and new powers to the European Parliament and to Strasbourg. There was nothing new in return.

Mr. Desmond Swayne: My right hon. Friend should be aware that at Amsterdam, a new protocol on subsidiarity was secured, but a careful reading of it shows that it means only that subsidiarity applies in those areas in which we have ceded no control to the European Union. When I pointed that out to the Minister, he did not demur, but merely replied that we should enjoy it while we still have it.

Mr. Davis: My hon. Friend makes my point more dramatically than perhaps I would.
I continued to wait after Amsterdam in the hope that perhaps there would be later concessions—in vain. We did not even get a seat on Euro X, despite the Chancellor's legendary commitment to the euro.
I obviously disagree with the Government's policy aims, but I am as disappointed as many others that their negotiating strategy, which was different from ours, has failed. I did not expect anything more, but I was disappointed, because that failure affects the national interest.
This week, we have heard more about monetary union and threats of tax harmonisation. We have already heard some robust exchanges between Front-Bench Members


today. It is not so long since Labour was claiming that monetary union did not imply any tax harmonisation or even pressure for it. Now we see proposals not just for tax harmonisation, but to remove our veto on tax law at the next intergovernmental conference.
Arguments about economic and monetary union as a solely economic project in Britain were always somewhat Alice in Wonderland. At meetings that I attended, nobody on the continent talked about monetary union except as a political project. The strongest debate was not about whether it was a political project, but about which should come first—political union or monetary union. All the exponents accepted that one implied the other. None of the Foreign Ministers or Prime Ministers I spoke to was in any doubt that monetary union was an integral component of political union.
It is no surprise that monetary union has brought with it the other trappings of centralisation of economic management. As the hon. Member for Crewe and Nantwich said, the corollary is a requirement for a large central budget to deal with the consequences. I should be surprised if we did not see that from our European colleagues in the near future. Anatole Kaletsky writes about that in The Times today.
The Chancellor would respond that he has a veto. That is correct and it is an important strength in his argument. Under no circumstances should he give it up. However, to imagine that the problems created by the start of monetary union can be resolved simply by the muscular use of the veto is at best simplistic.
Without the veto, Britain will face a catastrophic loss of sovereignty. Even with the veto, it will face serious difficulties; it will face many assaults and many pressures. Let us imagine that the United Kingdom Government manage to resist what will undoubtedly be increasing demands for tax harmonisation and other centralising economic changes, which are designed to eliminate what others regard as unfair tax competition that is destroying their jobs—we should remember that one man's tax competition is another man's unfair tax advantage. If that happens, the perception of unfair competition will go wider than tax issues; the Government's strategy will give rise to a more immediate threat to Britain's national interest.
The Foreign Secretary talked about European Union employment strategy. I fear that the Government may have created, without realising it, an economic doomsday machine that will do serious damage to the British economy in the medium to long term. For three reasons, monetary union will undoubtedly cause localised unemployment hot spots throughout Europe, even if it is successful.
First, the one-size-fits-all interest rate policy will cause unemployment in countries whose economies are on the down cycle when the rest of Europe is on the up. Secondly, countries that suffer badly from external shocks, such as collapsing markets in Russia or commodity price rises, will not have at their beck and call the fastest and most responsive economic mechanisms—exchange rates and interest rates—to prevent localised unemployment. Thirdly, the principal benefit of monetary union—the transparency of pricing across the Union—will mean stronger competitive pressures, which will lead

more transnational companies to move production from the least efficient to the most efficient areas of Europe, taking jobs with them. The result of that will be high unemployment in some countries, irrespective of whether monetary union succeeds.

Mr. Baldry: My right hon. Friend paints a picture of Britain being locked into permanent conflict with the rest of the European Union and reaping no benefit from its membership. If that is the reality as he and others see it, a time may come when we should debate whether our continuing membership is in our interests or even Europe's interests. It may be difficult for us to continue to be part of the European Union if we constantly attack our own membership.

Mr. Davis: My hon. Friend takes the wrong end of what I am saying, which may be my fault. I was arguing that Europe, at its best and at its worse, is a marketplace of argument. There is clash and sometimes co-operation between the interests of member states. We should not be in any way blinkered about that.
We should determine what the mechanism that we are creating produces as a result of that interaction of nation states' interests.Over the past 50 years, the mechanism has encouraged growth in trade and enabled us to have half our trade with Europe. It has helped us to avoid military conflict between the various countries and has, no doubt, given us a range of advantages in other policy areas, such as home affairs.

Mr. Nicholls: Will my right hon. Friend give way?

Mr. Davis: Let me answer one intervention at a time, especially when I have been taken completely off the line of my speech. I am arguing that we should debate the structures that are to be built into the European Union with open eyes. We should see what we are creating and what the consequences will be.

Mr. Nicholls: I am grateful to my right hon. Friend for giving way. He seems to have come to the crux of the matter. If one reads the treaty of Rome—which I did rather late in the day—it becomes obvious that it is in the business of setting up a common market not as an end in itself, but as one of a series of steps in the creation a new nation state. My hon. Friend the Member for Banbury (Mr. Baldry) asks whether we shall ultimately have to ask ourselves whether we can go on like this. Whatever conclusion we draw, that is a fair question.

Mr. Davis: Of course it is a fair question. I am not sure whether it is an advantage, but I have read all the relevant treaties, including the Amsterdam treaty, more than once—three times in most cases. Almost all of them contain a multiplicity of objectives, which should be no surprise—they amount to the wills of 15 countries now, not to mention institutions such as the Commission, which operates virtually as a 16th nation state.
All member states must have asked themselves that question. I put the question to myself and discussed it during my three years in the Foreign Office, as my hon. Friend the Member for Banbury (Mr. Baldry) probably remembers. I always concluded that Britain's membership of the Union was not only to our advantage, but to the Union's advantage. We fill an important ecological niche—if there is such a thing—in the Union.
There were occasions in the run-up to the Amsterdam negotiations—I am being tempted to talk for much longer than I had intended—when Ministers from other countries told me, as Minister of State with responsibility for Europe, to veto the flexibility clause, for example. I said to them, not unnaturally, "You've got a veto. Veto it yourself." The response would be, "No, you must understand that some of us can't stand up to Franco-German pressure. Britain is the only country that can."
Regardless of whether that is true, the other countries collapsed on that issue and that was not the only time when Britain brought to bear in European negotiations a point of view that was unique, but very important to the European Union and its continued traditions of democracy. I shall now attempt to get back to the argument that I was making.

Mr. Blunt: Will my right hon. Friend give way?

Mr. Davis: This will have to be the last time.

Mr. Blunt: My right hon. Friend is on a most interesting tack, so it would be a pity to leave it immediately. Surely a point comes at which the British national interest must be considered in the light of the role that we are being invited to play in Europe. The Government are already in that position. After 18 months, they are now almost completely isolated on tax harmonisation and have to look to the Spanish Conservatives for assistance. It will not be long before they are absolutely on their own—a traditional British position. The question that must be answered is whether that will always be worth it for the United Kingdom.

Mr. Davis: The issue must always be in front of anyone who is representing our country or making these decisions for it. I am perhaps a little kinder to the Government than my hon. Friend is; I take the view that they are still learning.
The history of the European Union shows that, on almost every contentious issue, there is first an argument about a matter on which the veto applies. Then, if it is at all possible, the European majority tries to make that subject a qualified majority voting article, as happened with the working time directive, the pregnancy directive and a number of other directives. If that does not work, the matter ends up in the European Court. Most recently, we have lost zero ratings on industrial construction for commercial purposes, which I suppose is understandable, and, rather disgracefully, on spectacles and contact lenses—I cannot imagine on what basis the court found against us in that matter, but it did. If that process does not work, there is a Schengen outcome—the 13, 14 or 15 go another way, set up a caucus and organise things to their own advantage so that one finds oneself at a disadvantage.
In the next decade, we shall have to face such problems over tax harmonisation. There will be the perennial attempt to remove the veto at the IGC—I predict that that will be on every IGC agenda until the attempt is successful or until the nature of the Union changes. None the less, our membership is worth while, as we continue to benefit from it. However, we must always ask the question, as my hon. Friend the Member for Banbury said.
Before that minor diversion, I was making the point that the system that monetary union creates will lead to localised hot-spots of unemployment throughout Europe. What will be the reaction of the countries that face those hot-spots? Will they decide suddenly to pursue Thatcherite policies? Will they deregulate their labour markets, cut on-costs and create employment, as the previous Conservative Government did? Is that the probable future of the new socialist Europe? I hardly think so.
We do not need to guess. We already have an example—we can read the book. About two years ago, Renault closed its factory in Vervoerde in Belgium—near the constituency of Jean-Luc Dehaene, the Belgian Prime Minister—and moved the production to France. What did Jean-Luc Dehaene do? Did he say that Belgian workers should cut their costs; that Belgian managers should become more efficient; that his Government would cut the burden of regulation and taxation on industry?
Certainly not—of course not. That is ridiculous. He called for an end to social dumping. He called for more regulation and harmonisation, and for more rules to stop the free operation of markets within and between the nations of Europe. That happened last time, and it will happen more and more often under the pressure of monetary union-created hot-spots of unemployment.
The difference this time is that there will be a mechanism for that call for more regulation to be turned into action. That mechanism, I am afraid, is the social chapter—not just the social chapter, but most specifically. The social chapter was created to allow harmonisation of labour law, and the Government have explicitly signed up to legislation under the chapter.
The harmonisation that we face that is most immediate is not tax harmonisation, but labour law harmonisation. We know from our history that that can cripple flexibility and growth, and can destroy jobs. It is not just the Opposition who know that—the Government commissioned the McKinsey report on the determinants of growth and the restraints on growth in this country. What was among the top three? Education and investment were not there, but competition and deregulation were. We know that the harmonisation of regulation will be very dangerous to our ability to create jobs. I want the Minister to say how the employment strategy of Europe will deal with this very real threat to British well-being and to British people's jobs.

Ms Rachel Squire: I agree with the right hon. Member for Haltemprice and Howden (Mr. Davis) that there is an advantage for Britain to remain as a member of the EU. When the right hon. Gentleman was a Minister, the Select Committee on European Legislation—of which I was a member—always appreciated his detailed knowledge of the issues on which we questioned him.
In common with my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), I want an open and informed debate on all the issues of concern to us in Europe. However, the speech by the shadow Foreign Secretary, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), and some of the interventions from Opposition Back Benchers have demonstrated how difficult it is in this so-called mother of Parliaments to have informed and balanced debate on such issues of importance.
Many Conservative Members and the tabloid press consider it incompatible for someone to be both pro-British and pro-Europe. The reaction of some of the media to anything to do with Europe—not least this week—seems at times to verge on encouraging xenophobia. The reaction is one-sided—they see Europe as the enemy, bent on invading our glorious island. They ignore some of the advantages and benefits that our membership of the EU has given to us and to our constituents.
The right hon. Member for Haltemprice and Howden mentioned some of those benefits, and my constituents certainly appreciate the ease of travel, the access to goods and markets of the EU, and European funding. Many constituencies, such as mine, have seen their traditional industries and areas of employment destroyed, and European funding has assisted in their efforts to create new jobs and economic regeneration.
If we are to deal effectively with many of the issues of concern, we must recognise that that can most effectively be done on a European and an international basis. One example of that—on which the majority of Britons would agree—is that tackling effectively the drugs industry and international crime must be done internationally.
I recognise that a number of hon. Members want to speak, and that the EU is a large subject to try to cover. I have decided to focus my remarks on two areas, both of which provide big challenges for the EU—first, the common foreign and security policy, and secondly, the challenge of making Europe seem more relevant and accountable to the lives of the people whom we represent.
Britain's relationship with Europe has been one of constant development and change, as those who are familiar with our history will know. It may help to remind ourselves that the very concept of the nation state is a fairly recent development in terms of European history. We must disentangle ourselves from the views of those hon. Members who still seem to cling and hark back to the days of the glorious British empire.
By virtue of our history and geography, Europe is where we are now, and it is where we must have a leadership presence in the 21st century. I am keen for us to have more debates on a common foreign and security policy for Europe, and what that would entail. Because of our geography, history and international reputation—and our high standing among nation states in many parts of the world—we in Britain are in a key place to take a lead. The process of European enlargement means that we must engage in a constructive dialogue on foreign and security policy.
If we are to succeed on the social and economic fronts, we need a stable and peaceful Europe—one where there is a good understanding of the different perspectives, of which there are many, due to the different locations of current member states and those states seeking to join. It is only by communication that we can try to break down some of the years of hostility, distrust and suspicion that have existed between some of those countries, develop a dialogue of trust and share a common agenda.
The "Partnership for Peace" process has demonstrated the success of that communication and joint working. It has brought together nations which, not so long ago, were clear enemies, and it has helped to break down quickly some old attitudes and prejudices.
The European Union has a role to play in that, and it cannot be left entirely to NATO, although I fully agree that NATO is the bedrock of our defence in Europe. Only through a close and constructive relationship with our European partners on common foreign and security interests can we seek to make an even greater positive contribution on the world stage.
I want more debate on the common foreign and security policy. We have a real mix and match of categories of countries in Europe that are involved or interested in our foreign policy, security and defence. There are countries that are in both the EU and NATO; those that are in the EU only; those that are in NATO only, and want it to stay that way; those that want to be in both; those that have been promised membership of one or the other; those that want to join both but are feeling rebuffed; and those that want to stay outside but somehow have a special relationship with Europe.
We need to focus more on the subject. As they would say in Scotland, we have the auld alliance with France, which wants to remain semi-detached from NATO but to raise its profile in European security issues. As we have seen all too clearly, that mix and match has made it extremely difficult for us and our European partners to agree and stick with a common approach when facing an international crisis, whether in Kosovo or in Iraq. Many hon. Members are keen to have a more rapid and effective European response to such crises, which affect the peace and stability of Europe.
I welcome the way in which my right hon. Friends the Prime Minister, the Foreign Secretary and the Secretary of State for Defence are trying to open up the debate on the EU' s defence role and the future role of the Western European Union.
We also need to consider the future of the industries that give a technological lead in the EU, many of which are strongly associated with the defence industry. Those industries have been telling me that they want the EU to be more active in helping them effectively to rationalise into a strong and effective competitor of our close and special ally, the United States.
Most of our constituents do not regard Europe as affecting their everyday lives or as being interesting or accountable to them. It is seen as remote and bureaucratic, and as providing a convenient gravy train for unaccountable officials. It is in our interests as a country to challenge that view and to promote greater openness and accountability, not only in our own system of government—as the Government have done with the creation of the Scottish Parliament and Assemblies for Wales and Northern Ireland—but in Europe.
Anyone who has been an election agent in a European election, as I have, will know how difficult it is to persuade members of the public that the matter is one of key concern to them.

Mr. Blunt: The hon. Lady is inviting us to have the proper debate for which the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) called. There is a substantial political implication behind economic and monetary union. Does she agree that we should now consider the political and democratic accountability that will have to


be built around the single currency and the single economy to make the European institutions accountable to her constituents and mine?

Ms Squire: I would certainly welcome a far more open and informed debate on all issues of concern in the European Union, be they economic, social or foreign policy-based. It is depressing how difficult it seems to be to have that debate without getting a tabloid reaction from some of the media: they do not give us information on or arguments for and against the various aspects of our approach to Europe.
My right hon. Friend the Foreign Secretary suggested that we should identify clearly those areas that should come under subsidiarity and those, such as the drugs trade, on which an international or common approach can be of mutual benefit.
I welcomed the fact that, at the end of our presidency, one of the conclusions reached at Cardiff was that a sustained effort is needed to bring Europe closer to the people. That is even more important now, when countries without our long tradition of parliamentary democracy and debate are joining the European Union. I welcome the ideas coming from independent groups such as the Centre for European Reform about how we can make the Commission more accountable. I do not know whether that should happen through elections, but I would like to hear people's views on the subject.

Mrs. Dunwoody: Does my hon. Friend really think that there will be any move towards electing the Commission? It is a hybrid organisation in which jobs are reserved according to nationality. Its very rigidity makes it impossible for it to become accountable, and that is what occasions the grave reservations that many people in the United Kingdom have about it.

Ms Squire: I am by no means advocating any particular approach. I entirely agree that the Commission is seen as remote and unaccountable, producing endless reams of paper that no one can understand. I would like the Commission to be introduced immediately to the Plain English Campaign so that it produces stuff that is readable. I would like the House to have more open debate on how we can make the Commission and other European institutions accountable and help our constituents to feel that there is a direct link between those institutions and the reality of their everyday lives.
There is no future or comfort in adopting a British isolationist approach. We know only too well from the history of this century what a high price Europe has paid for isolationist approaches in individual countries. They have fed territorial instincts, prejudice and ethnic conflict. The best tribute that we can pay to those who have sacrificed so much for our peace and freedom is to seek co-operation, partnership and communication with fellow member countries in the European Union.

Mr. David Heath: In my brief experience of the House, I have noticed that the only thing that stops foreign affairs debates being timetabled for Friday mornings is if the House is not sitting. In that case, they are held on Thursday evenings, but it would be a pleasure at some time in the future to attend a foreign

affairs debate in parliamentary prime time. Nevertheless, we have had a valuable debate with some interesting contributions.
In many ways, we have had an interesting political week and the crisis—one might say disaster—that has befallen the Conservative party in the past day or so has been fortunate in many ways, not least because it drew the press's attention away from their unremitting campaign of questioning the direction of British European policy. The crisis even brought The Sun back from expressing itself in inadequate German to its normal practice of expressing itself in inadequate English.
When the Foreign Secretary appeared before the Foreign Affairs Select Committee earlier this week, I asked him whether he felt that there had been a change in attitude to the principle of subsidiarity in the European Union. He was more sanguine than I believe was justified in the circumstances. In the past few months, a renewed climate of indecision, even hostility, has developed around some basic tenets, which I am sure I share with the Minister, behind the development of the European Union.
Everything must have seemed very different only a few months ago when we watched the election of the new German Government, which joined other socialist Governments—at least nominally—across Europe. It must have been with some glee that the spin doctors from No. 10 and the Treasury visited continental Europe to talk to Mr. Jospin's médicins de rotation and Mr. Schröder's Drehungdoktoren. Together they would be able to form a miasma of European spin to create the new European way, as it was described, which may be a continental version of the third way. However, it seems that all that effort was in vain, because it has all gone wrong in the past week. We may draw a couple of morals from that. First, do not let the Treasury try to run foreign affairs, because it is not equipped to do so. Secondly, there is still a real debate about the direction of the European Union and the arguments have not yet been won. The difference between this Government and the previous Government is that we are all now at least engaged in the arguments and can contribute to them. I hope that is what will happen in Vienna.
Earlier in the debate, the Foreign Secretary quoted Chancellor Klima as saying that tax harmonisation would take up one minute of the time in Vienna. I sincerely hope that he is wrong, because that crucial question should be addressed by the heads of state and foreign secretaries. The controversy we have seen in the newspapers in the past week has been somewhat synthetic. Mr. Lafontaine has conveniently been portrayed as the new bogy man—the new thing of the night—to replace Jacques Delors, in his time, and Jacques Santer, although the latter never had a sufficiently exciting persona to cut the mustard as a bogy man. Mr. Lafontaine has some potential in that area. We have seen proposals from 1996 dredged up and displayed as a real and current danger of standardisation across the European Union.
It would be offensive if I were to appear patronising to a senior politician of a partner Government, but Mr. Lafontaine has not been helpful to the European debate in the past week, for a couple of reasons. One is that, after a long period in opposition, he is a member of a newly elected Government. As we have seen, that sometimes causes people to speak in haste and then repent at leisure that they were not quite as diplomatic as they should have been. Another reason is that Mr. Lafontaine


is a Saarlander—that is an important factor. He looks out of the window in Saarbrücken and sees people coming across the bridge every morning from the villages around Sarreguemines on the other side of the border. In that part of Europe, harmonisation is a real factor, because people live in France and work in Germany and vice versa. The border is very porous and the effects of that are a factor in his political make-up.
In recent days, the British Government have gone some way to addressing the issue, although not as plainly as I would wish. I am disappointed that the rebuttal of the proposals for tax harmonisation has been couched in a chimeric expression of sovereignty, because there are strong arguments against harmonisation that have nothing to do with sovereignty, important though that is. First, it removes the only element of flexibility within the rigid framework of tax policy that the Maastricht treaty laid out. Secondly, tax harmonisation cannot be reconciled with subsidiarity. The two do not go together. If one is genuine about subsidiarity, national Governments must have the freedom to set tax levels. Thirdly, tax competition is a useful mechanism. Genuine tax competition—I do not mean tax evasion or the abuse of the tax system that we see in some of the tax havens dotted around Europe—helps to establish economic parity between nations. Although harmonisation of tax levels across international borders may sometimes be a good thing, compulsion is not. The argument is the same as for compulsory competitive tendering in the domestic sphere. There is nothing wrong with competitive tendering, but if it is made compulsory it is wrong because it forces distortions on local choice and on the end result. We must also point out to partner states in Europe that tax harmonisation could also prove painful to their national interests—the President of the Commission may recognise that from his national background.
My second point concerns the protocol on subsidiarity. I was pleased to hear the Foreign Secretary say that some of the mechanisms of that protocol may be put in place before the eventual ratification of the Amsterdam treaty. The tragedy is that that has not happened already. If the nations of Europe were agreed that subsidiarity had to be made a reality, why was not the European Commission required from day one to justify any proposals it made in subsidiarity terms? There is no reason to wait for ratification. It is essential to see whether the protocol produces the right results. I would go further. We should seek codification across Europe, not just of treaties, but to establish the basic principle of subsidiarity—devolution of power to the lowest available level. We simply do not have that now.
I know that it is unhelpful to talk of a constitution for Europe, because others use that phrase in different ways, and it carries implications of a superstate, which I certainly would not support. However, we need something that says that some things are best done locally, regionally or nationally. Only matters better dealt with at the European level should be dealt with at that point. Such change should be retrospective, going into the acquis communautaire. We cannot leave aside all that has been done to date, saying that it was right just because it has been agreed. Times change, and matters ought to change with time.
I hope that the Vienna council will address the management of the EU and how the Commission organises its affairs. The Court of Auditors report on the mismanagement of international aid was so damning, not just of the small element of fraud, but of the much bigger element of mismanagement and simple incompetence that it cannot be left to the scrutiny committees of the European Parliament to put matters right. The Governments of the member states must call the Commission to account, and must say that that state of affairs cannot continue. We must have better management.
The British Government have exactly the right attitude towards budgetary control, and they should work with those who take an equally well defined view of how that control can be implemented. I mention with approbation, because I have spoken to him a number of times and I like what he says, the Finnish Commissioner, Mr. Liikanen, who has done a good job in putting forward proper suggestions for control of the European budget.
The proposals on EU co-operation on justice and home affairs are an important area for further development. We have seen initiatives on combating the drug trade, or international crime. However, a degree of—dare I use the word harmonisation; probably I dare not—co-operation across Europe is important to make sure that internal security measures are compatible and effective.
The Government will have to reconsider their position on asylum and immigration to ensure that our policy is compatible. The same is true of the future of the Schengen agreement, because we shall eventually find that it is in our national interest to have a degree of association with it. We must, of course, recognise our particular position as an island state, with all that that implies, but we must, nevertheless, consider the Schengen agreement anew.
The common foreign and security policy will be crucial. I wish the Prime Minister well on his day trip today to St. Malo, as I wished him well in Pörtschach. I wish, however, that he would occasionally share with the House the thoughts that he is so willing to share everywhere else in the world about the future of the common defence and foreign policy. He is exploring new areas of crucial importance, and the House ought to be able to express an opinion. As the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) said, we received no statement after Pörtschach, despite the best endeavours of Conservative and Liberal Democrat Front-Bench spokesmen to encourage the Prime Minister to give us one. I hope that he will explain his thinking to the House in the very near future.
We must maintain a commitment to NATO, an organisation of desperate importance to us. No one argues with our maintaining the inalienable right of the British Government to be the only body that can send British troops into danger. Anyone who feels that that can be short-circuited is quite wrong. Even so, it must be good to increase co-operation, and to increase the capacity to integrate the armed forces of Europe, particularly those of Britain and France, the real players who have strong armed forces in the European theatre.
In foreign policy, it is time that a senior diplomatic representative was appointed. It has taken too long to reach that point. Many Members are simply unaware of the scale of the European Union's diplomatic corps across


the world, which is enormous, but undirected. We must fix its direction, and we must, in whichever areas we can, agree a common policy. That is particularly true in continental Europe, on the fringes of central and eastern Europe and in the Mediterranean area. One of the great negatives of the past year has been our complete inability to do anything effective in Algeria, on our doorstep. That failure speaks volumes for the need for a better integrated foreign policy.
EU states have already done quite well at integrating efforts at the United Nations, but I hope that we can do more. There is a high degree of interplay between the permanent representatives of the EU states at the United Nations. However, we heard in the Gracious Speech about the Government's commitment to UN reform, an area on which Europe has something important to say. I hope that we shall not consider only Security Council reform, because that may prove to be a dead end up which it is impossible to secure the agreement of other member states. Other areas are in desperate need of reform, and of new investment that can come only if we reduce overheads in areas in which money is being mis-spent because of a lack of will to look seriously at the distribution of funds. In particular, some agencies no longer perform a useful function, and their time, frankly, is up.
As a European entity, we should put real pressure on the United States of America to pay its arrears to the UN—it is scandalous that it is $1.5 billion in arrears. The Administration's arguments about difficulties with Congress will not wash. Insufficient effort has been made to ensure payment of those arrears, and we must pressure the USA, not least because we are the main creditors. Britain, France and the other countries that contribute to peacekeeping operations are not being paid because America will not pay its bills.
On Agenda 2000, the Cardiff timetable is desperately important if we are to see proper reform of the institutions. The Germans say that they are committed to it, and I ask the Government to ensure that that commitment is made explicit at the Vienna council.
Progress has been made on enlargement, even among some countries not in the first phase, such as Latvia, Lithuania and Slovakia, with its change of Government, and I hope that they will catch up rapidly. The Government should continue to adopt the principle of inclusiveness. We must make sure that everyone who is potentially in the running is encouraged to stay in the running.
The same applies to those countries in the first wave that are not making the necessary reforms. Having visited Prague recently, I am frankly disappointed with how the Czech Republic is meeting the demands of accession. We must tell such countries that they must ensure that they do what is necessary.
I shall finish by referring to two areas of current attention that the Vienna Council will probably touch on. The first is the crisis in Russia. It is desperately important for the European Union to do something effective to ensure stability there during the present economic crisis. We must also think of the countries that are still dependent on Russia irrespective of the changes of recent years, such as Belarus, which is not an easy country to like, but which we nevertheless need to embrace and Ukraine, which we often forget. Ukraine is a country the

size of France and it will be on the borders of the European Union if Hungary accedes, yet we forget about it. We cannot afford to do so.
Finally, I hope that Kosovo will still be on the agenda at the Vienna Council and that we will ensure that we make a concerted effort on humanitarian aid. A few months ago, I visited the former Yugoslav Republic of Macedonia. I went to the border, although not to Kosovo, and could see to some extent what was happening there. One problem is the almost complete lack of building materials. It is difficult to get them in peaceful Macedonia. How much more difficult it must be in Kosovo, given its devastation and the non-co-operation of the Serbian Government. We must tackle that problem and contribute positively to the extraction force, as we have been doing, to ensure that it is integrated into the Kumanovo area and does not cause any further difficulties for the Macedonians, who have gone through a difficult period.
I hope that we will also consider the interests of other neighbouring states. We cannot afford to forget Albania and Montenegro, which is the forgotten part of the former Yugoslavia, but has the capacity for destabilisation, which is a serious matter.
In conclusion, I must simply say that there was an attempt to form an Anglo-German axis a month or so ago. I suspect that it has not succeeded. Nevertheless, we must maintain our engagement, our interest and our persuasion, if the European Union is to develop as we want and, by we, I mean not only Opposition Members but those on the Treasury Bench, who share that view, I think. If we are to make sensible developments and to achieve reform, we need friends to do that. We need to work to form a creative coalition within the EU, which recognises the dangers of carrying on as it has done and the deficiencies in the present structure. It should work hard to reform the EU, bring it closer to the people and make it answerable, responsive and democratic—all those things that, in many ways, it fails to do at present. If the Government can achieve that at the Vienna Council, I wish them well.

Several hon. Members: rose—

Mr. Deputy Speaker (Mr. Michael Lord): Order. Before I call the next hon. Member to speak I must remind the House that a number of hon. Members still want to catch my eye and, unless speeches are considerably shorter than they have been, some of them will be disappointed.

Mr. Alan Simpson (Nottingham, South): I am an unashamed admirer of my right hon. Friend the Foreign Secretary. When Labour came to power in May 1997, I thought that one of the greatest contributions that we could make as a Government would be the intellectual ability and clarity of mind that he would bring to the European dialogue. I continue to hold that belief, so I hope that he will not mind if tonight I expand the area of my admiration a little.
It is important to break away from some of the caricatures that have appeared in the press in the past week, which have verged on the xenophobic and which do not do justice to the contributions that two people, Oskar Lafontaine and Dominique Strauss-Kahn, are making,


which we should recognise. Their contributions to the document, "The New European Way", move us into the arena that many of my colleagues have sought to occupy, which is a thoughtful discussion of the future of Europe and the practicalities of that future. I have many and various disagreements with the document that they helped to produce, but its importance—I would recommend it to the whole House—is that it forces us all to think about the practicalities of a common European future. It is not riddled with slogans and soundbites; it attempts to tackle the serious preconditions that will have to be in place if we are to provide a stable European future.
In the document, the authors recognise that fiscal stability is not the same as social stability. Europe has had fiscal stability in a single currency before—at the end of the 19th century, under the gold standard. The only problem was that it left deep scars in the social landscape of Europe. Because there were no mechanisms for social cohesion, that standard left people in deep troughs of famine and starvation. They were pushed into large-scale migration and social upheavals, which in turn caused deep disruptions in society.
In revisiting the agenda for a Europe that is united within a single currency, the architects of that paper recognised that other mechanisms must be in place to underpin a single currency and make it sustainable. I confess that I am not a believer in a single currency and do not think that it can work in the circumstances in which we are trying to construct a common European future. There are many better ways to construct that common future.
However, the authors of the paper force us to recognise what measures must be in place. The reality is that, both in the world as it is now and in the history of single currency zones, there is no record of any system that has been stable and secure without two things being in place. The first is a consensus about how to raise taxes, and the second is a credible mechanism for redistributing them to provide social cohesion.
Those who say that the single currency will not require us to harmonise income taxes, pensions and benefits and who look to the United States because of the flexibilities that exist there—different income tax rates in different states, for example—must take a step back and recognise that the underpinning of that system has a set of consequences to which we may or may not want to subscribe.
I was fortunate to obtain from the Library some of the figures to show how the US single currency zone is different from our own. At the moment, the contribution of US taxes as a proportion of gross domestic product is as follows: 12.3 per cent. go directly in federal taxes; 5.6 per cent. go in state taxation; and 3.6 per cent. in local taxes. We do not have an equivalent to US state taxes. The current position in the United Kingdom is that 27.5 per cent. of our taxation, as a proportion of gross domestic product, is national and 1.4 per cent. is local. If we wanted a system with the same income tax flexibilities as the US system, we would have to recognise that it underpins its system through that shift in the collection of tax revenues to the federal level. If we were to apply that system in Europe, it would mean the direct transfer of taxation—of some 20 per cent. of our GDP—to a European federal level.
I remind the House that the United Kingdom's contribution to European structural funds will be 1.27 per cent. of GDP at the beginning of next year. I have not heard anyone argue the case for retaining within the nation state the flexibilities of variable and differing income tax levels, by underpinning those with a 20p in the pound shift in taxation to European federal structures. I should like to be with any Member of Parliament who tried to explain that on the doorstep. I suspect that the only thing it would prove is that, under conditions of extreme pressure, all Members of Parliament can run the 100 metres in an extremely short space of time, because we would get short shrift from the electorate were we to make that case. We must be careful about saying that tax-varying flexibility can currently be found in the United States of America. It is not the same and it is dishonest to suggest that it could exist here without there being a substantial shift of direct tax contributions from member state level to European federal level.

Mr. Letwin: The hon. Gentleman is making a most interesting and thoughtful speech—indeed, the point he has just made is seminal. However, does he agree that a further point goes with it—that for all sorts of obvious cultural reasons, mobility of labour within the United States is vastly greater than can be expected within the European Union; and that, therefore, the need to adjust to those flexibilities through central funding is paradoxically less in the United States than it will be in the European Union?

Mr. Simpson: That is an important point. Most serious analyses of conditions in Europe, both positive and negative, recognise that language and culture make the people of Europe far less mobile than the population of the United States of America. In addition, the greater the levels of that forced internal mobility, the greater the social conflict that arises between local communities and those who are defined as outsiders, so I am cautious about where that would take us.
On the other hand, we could argue that it would be possible to have internal redistribution mechanisms of the sort in which Germany gave an inspirational lead. When Germany was reunified, one of the commitments that the west made to the east took the form of a solidarity tax, which recognised that huge transfers of resources were needed to end the poverty and build the basis of social inclusion in a united Germany. The equivalent of an extra 7p in the pound in taxation was voted by the German people in order to build that basis of social inclusion. I have nothing but admiration for the Germans for doing that.
Is that immediately translatable to a European Union level? Sadly, the answer is no. As was demonstrated by the Court of Auditors report—which was rightly raised by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) in relation to democratic accountability—the problem affecting European institutions as they stand is that there are huge weaknesses in the way in which Europe is able to manage and account for money, with £3 billion unaccounted for and up to 5 per cent. of funds lost to fraud. It is not acceptable for any of us to apportion blame for that, because we are all caught up in it. This country is no holier than any other member state in terms of the misuse of funds and the abuse of European structures in our own interests.
The problem is that, if there was a shift in funding into European structural coffers and the amount was multiplied by five, fraud would be multiplied by 50. That is the consequence of trying to put more resources into a framework that is clearly deeply and seriously flawed. Those who believe in a single currency and want it to work must acknowledge that the institutional and financial structures of Europe would have to undergo a massive sea change in order to make it possible.
The document I referred to earlier sets out the key challenges that must be addressed if social cohesion is to be built in a future European context. I shall quickly deal with the key points. The first is found where the authors, in a lovely little sentence, call for
better coordination between monetary policy and employment and wage-policies",
and also
a dialogue between the institutions responsible for economic policy, including the ECB and the European Social Partners".
That is wonderful for those accustomed to attempting to decode the contents of European documents. The authors want there to be democratic political control of the European central bank. For those of us who never really believed that Steady Eddie should have been allowed out on his own, it is welcome to hear that our social partners in Europe want democratic control of the ECB so as to deliver full employment policies and social inclusion policies, which are at the centre of their social, political and economic agenda. That would, of course, require a certain renegotiation of the Maastricht treaty, but between consenting adult member states, that strikes me as a perfectly legitimate objective because it is an essential underpinning of how to deliver social stability in Europe.
The second key point the authors make is:
In the last decade evidence from the EU has shown a disproportionate increase in the fiscal burden on immobile factors, especially labour, coupled with a reduction in the burden on mobile factors, especially capital.
The partnership between socialists and social-democratic partners in the European Union has at last recognised that there has to be a shift in the burden of taxation on to feckless and footloose capital; that we cannot continue to ask the poor and those who are in work to carry the tax burden for an increasingly reckless and deregulated global economy that is driving us all to ruin. I welcome the fact that the authors of the document have put that point so clearly on the agenda.
The third point is to observe that
EMU will intensify the potential for tax competition. Therefore, further efforts have to be undertaken to avoid harmful tax competition among the member states.
That is absolutely clear and absolutely right, if we are to avoid the flight to tax havens, eliminate hidden subsidies and avoid a game of beggar my neighbour in which we all try to undercut each other or to set up systems of corporate welfare, whereby we offer bigger bribes to lone-parent companies to come and live with us for a time based on an enduring love for which we are to pay good money. If we are to avoid all that, we have to find other ways of developing a sense of coherence and cohesion in the systems of taxation of corporate earnings. It is essential that we do that, whether within a single currency zone or not. The authors make the point that that effort is essential, if we are to
make further progress in tax and benefit reform.

There has to be a sense in which that inclusive Europe allows us to enjoy the security and benefits that are present in the best economic arrangements, instead of being pulled down to the levels of the worst.
In that revisiting of a common view of Europe's tax arrangements, the authors say that there has to be a greening of the tax system and a co-ordination of savings and corporate taxation, not only within Europe but at the level of the Organisation for Economic Co-operation and Development. They want that to be the basis for the introduction of new Europe-wide regulations which use Europe as a lever to compel the institutions of the global economy to re-regulate global forces.
I hope that hon. Members on this side of the House at least will address that agenda seriously. I hope that we will applaud the initiative taken by our sister parties in Germany and France and by the coalition of parties that contributed to this document. I hope that the Government will agree to take forward several practical suggestions from this debate. I think that the document has serious shortcomings, but we could substantially improve the dialogue and the direction in which it is heading.
I shall conclude by making four suggestions. First, in the discussions about how best to harness footloose capital it would be helpful to consider the devastating destruction of tidal speculation movements against countries and currencies globally. A European-wide lobby must change the international financial architecture so that we can introduce a transactions tax on speculative capital. That is commonly referred to as the Tobin tax, as Professor James Tobin of Harvard university was the first to suggest it. It involves imposing a tax rate of 0.5 per cent. on speculative capital movements. That would be sufficient to raise the reserves that could underpin and support countries that are subject to speculative ventures against them and act as a disincentive to speculative, but not serious, investment.
My second suggestion concerns our treatment of other forms of footloose capital. We are currently bombarded by reports in our daily newspapers about factories closing in order to rationalise production elsewhere. The scale of job losses is sometimes breathtaking. As I entered the Chamber tonight, I picked up a letter about my constituency, where Marconi Communications has announced that
a review of the Group's facilities has shown the potential for a reorganisation that would reduce costs and increase efficiency.
Unfortunately, the review requires the group to make 1,000 people redundant in order to continue its policy of production based on "high growth" and "high margins". That means that it will no longer operate in my constituency.
America takes an interesting approach to that problem. It is already exploring the idea of "A" code taxation based on the "site here to sell here" presumption. America believes that companies cannot reserve the right to sell into the US economy goods that they are unwilling to pay to produce in that economy, or because they are unwilling to sustain wage rates in production and contribute to tax revenues that would begin to relocate or retrain those whose labour they have abandoned. The Americans are toying with the idea not of ending the notion of public subsidies for industry and essential manufacturing, but of trying to build a stakeholder component into that process. We must tell the corporate sector that there are no free


handouts: we are talking about obligations that accompany entitlements. Those obligations are based on public stakeholdings rather than unconditional public subsidies.
My third suggestion is that we should expand on the document's ideas about green taxation. We have yet to have a serious debate about the different types of green taxation and the difference between progressive and regressive green taxation. I remind hon. Members of our clear slogan and principle in relation to the environment that we must pursue policies that make the polluter pay. We should also ensure that the footloose polluter pays more.
Earlier today, I referred to the Raleigh bicycle company in my constituency, which has spent about £28 million on a new production line with extremely high levels of environmental responsibility. It has reduced by a factor of 10 both in-plant pollution—the health and safety contributions—and end-of-line pollution. It has introduced wonderful through-put technology. However, the company complains that it is forced to compete on a price-only basis with Chinese or Taiwanese manufacturers who never accept any responsibility for reducing pollution in the production process.
We cannot pursue a common European policy that rewards the environmentally profligate and penalises those who operate within our domestic and European economies producing the environmental standards that we wish to see and share in. If we adopt that approach, we shall be able to take a lead in defining the economics of the 21st century and give practical form to the pledges that we made in Kyoto. If we do not have sustainable economics in the next century, we are likely not to have any economics worth talking about. We have done so much damage to our global climate and biodiversity this century that we will have to spend a large part of the next century undoing that damage and restabilising.
Finally, the document poses a clear challenge to define what a system of redistributive taxation would look like at a European level. In many ways, the closest that we have come to responding to that challenge in this country is the recent Acheson report on health. Acheson sets down a benchmark for measuring the necessary redistribution of resources and explains where we need to begin in a health and environmental context. If we were to take up those ideas and throw our responses to them into a European dialogue, I am certain that we would take a lead in Europe that many of our European partners would gladly follow.
I believe that that is the basis upon which we can define a stable, secure and inclusive Europe. It will be the case whether or not we have a single currency. I believe that the divides around the single currency issue are seriously flawed and misguided. At times, it is like trying to get our towels on to the deckchairs before our German or French competitors when the boat is the Titanic and we would be better off advising people to look for the lifeboats. That is the danger inherent in limiting the single currency debate.
"The New European Way" sets out the pillars from which socialists and social democrats across the whole of Europe should be able to find a common agenda to provide a secure common future. I hope that Ministers, especially my right hon. Friend the Foreign Secretary, will have the courage to take that lead.

Mr. Patrick Nicholls: I congratulate the hon. Member for Nottingham, South (Mr. Simpson) on that magnificent speech. I remember meeting him many years ago when I was a Minister and travelled to Nottingham. I think that he has worn rather better than I have—but that is the way of things. He made a masterly assessment and analysis of the lessons to be learned from the American experience in so far as it has implications for us. I should like to think that the speech will commend him to those on the Labour Front Bench, but I am not sure that it will.
This is my first opportunity since the general election to contribute to a debate about the European Union. In fact, the issue of Europe dominated my election campaign. I found that the only thing that people wanted to talk to me about when they saw me in the street was the European dimension. I attribute my somewhat thinner majority in the election to the fact that because we have not closed down the argument by answering the question that people asked—"Where do you stand on a single currency, one way or the other?"—the subjects that the vast majority of people wanted to discuss with a Conservative candidate were never raised.
The conclusion that I drew was that we should never find ourselves in that situation again. That I why I am delighted that my right hon. Friend the Leader of the Opposition has adopted a position on the single currency which strikes me as being right and intellectually honest, and which commands the widest support among the people who spoke to me in the election campaign.
The single currency is sometimes spoken about as an end in itself, as though it was a new phenomenon that has suddenly darkened our horizons. I came to the issue somewhat late in the day. As I recall, I voted against entry into the Common Market, but that was probably very much on the balance of probabilities. I cannot honestly say that, cheerful and young as I was at the time, I gave it a huge amount of thought. The first time I gave the matter serious thought was in 1988. I was a Minister in the Department of Employment, where I was responsible for trade union reform. One day the Minister of State who used to deal with matters European found that he had a tummy upset or some such indisposition and could not go to Europe. I was told, "Minister, you are going to Europe. The car is downstairs, the Red Box is on the seat, and you can read the papers on the way over."
On the way over I read the papers, which were straightforward. At the bottom of my Box was an extra document, a copy of the treaty of Rome. I read it for the first time, and was both appalled and shamed by it. I had always accepted that the treaty of Rome was about establishing a common market. I had believed what I had been told. In the White Paper that preceded our entry into the Common Market, we were assured that
decisions are only made if all members agree".
We were also told:
There is no question of Britain losing essential national sovereignty.
There was no question at all—it was inevitable.
When I read the treaty of Rome, I realised that it was about establishing not a common market, but a new nation state, and that the establishment of a common market was merely a step down that road. Anyone who reads the


treaty of Rome realises that the common market, the single currency and so on are deliberate stepping stones to a federal destiny. Members of my party should recognise with contrition that our European partners realised that throughout. We did not, because we accepted the assurances that we were given that federalism was not on the agenda.
My hon. Friend the Member for Reigate (Mr. Blunt) quoted Hans Tietmeyer, the president of the Bundesbank. One of his predecessors, Karl Blessing, said:
The final goal of the Commission is a European Monetary Union… A common currency … is feasible only if, apart from a common trade policy, there is also a common finance and budgetary policy, a common social and wage policy—a common policy all round. In brief, this would only happen if there was a federal state.
The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) got it right when she said that it was so plainly obvious that tax harmonisation is absolutely necessary if we are to enter a single European state that it was barely worth arguing about.
The blueprint for the single European state, which can be created only if our nation state is extinguished, was laid down long ago in the treaty of Rome. We are at the 11th hour in the setting up of that new, independent state. It already has many of the attributes of such a state: an anthem, a flag, a Parliament, its own civil service, a common citizenship, its own overseas embassies, a common passport and, within days, it will have its own common currency.
Tax harmonisation is not a big surprise and has not just come on to the scene. It is inevitable. I shall not go through the documentation, as time is short. Far from standing up fearlessly against tax harmonisation, the Government are actively promoting it. That is the reality behind the rhetoric.
In addition to all the other attributes of a single state, we have discovered in recent days that we are to have a common legal system. Anyone who doubts that and fancies some bedtime reading should try reading "Corpus Juris" and what its apologists say. Stephen Woodward, the director of the European Movement, described the notion that "Corpus Juris" could ever be adopted as "ridiculous." He said that it was a report drawn up by a "group of experts" with no official status. He said that it
goes nowhere near the creation of a system of European criminal law.
What does "Corpus Juris" do? I shall tell the House. It is a plan that envisages a European public prosecutor, the EPP—not much room for signwriters there—to whom each state's prosecution chiefs would ultimately be responsible. The Brussels-based EPP would be independent of national authorities and have a delegate in each capital city. The prosecutor would have the power to instruct a national judge to issue a European arrest warrant that would be valid across the whole European Union.
"Corpus Juris" states:
For the purposes of investigation, prosecution, trial and execution of sentences concerning the offences set out above … the territory of the Member States of the Union constitutes a single legal area.
It continues:
If an investigation conducted by a national authority reveals that an offence has been committed the dossier must be immediately submitted to the EPP.

There is to be a new judicial figure called the judge of freedoms. That should amuse anyone who has a ghost of a sense of humour. He is to give authority for suspects to be held for up to nine months under European jurisdiction and to be transferred to the country where the crime took place without extradition proceedings. "Corpus Juris" states that
courts must consist of professional judges, specialising where possible in financial and economic matters, and not simple jurors or lay magistrates".
Goodbye habeas corpus.
The document does indeed have official status. It is an official European document, produced under the aegis of Francesco De Angelis of Directorate-General XX. In the report that introduced and commended the document, the rapporteur, Mr. Rinaldo Bontempi, points out in sections IV and V that there is no need to worry about the national veto. He suggests that rather than using the third pillar,
the basis for such action is to be found in the EC Treaty, with particular regard to Article 209a, whose provisions were strengthened by the Amsterdam Treaty".
The report goes on to say that that article
makes cooperation between the Member States and with the Commission an obligation… the Amsterdam Treaty extends it to all the competent authorities including the judicial authorities.
Mr. Woodward describes such a document as having no official status. Sooner rather than later, it will simply be introduced. There are always three stages in such cases in Europe. First we are told that it does not exist. Then we are told that it will not happen. Finally, we are told that it is inevitable.
I have one of the only copies of "Corpus Juris" around. The journalist Graham Danton, who got it for me, had to telephone Brussels and Luxembourg three times each. First, officials there denied that the document existed. Finally, they asked, "Why do you want it? You don't need it." Only when he said that he had heard that it was a really super book that would take forward the course of European integration did they say, "OK, that's fine—you can have it," and send him a copy.
I make no criticism of our European partners for behaving in that way. What they want is a single European state. That has been obvious from the inception of the treaty of Rome. It is not up to us to criticise them for what they want, but it is up to us to ask ourselves whether that would be right for us. Could we feel comfortable with such a relationship in Europe?
Back in March 1995 my right hon. Friend the Member for Huntingdon (Mr. Major) said in a debate in the House:
The often unspoken fear of many people—we should address it honestly and clearly and examine it—is that Europe might develop into a super-state, an overarching Government with no national veto, no control over our own borders, prescriptive decisions, a single currency imposed and the nation state retreating to a wholly subordinate role. That fear exists out there … and we should recognise the fact that it exists.
He concluded, and it seems so long ago:
I for one would find such a Europe wholly unacceptable for this country. I do not believe that it is remotely likely, but, if that were to be the future, it would not be a future that would be suitable for this country."—[Official Report, 1 March 1995; Vol. 255, c. 1062.]
We are there. We are in the presence of a new created state which requires our own nation state to be extinguished. We cannot go on being the bad man of Europe and standing in the way of our European partners


because we do not believe that their destiny is right for us. It is not a question of coming out of Europe. Europe is there. It is our own continent. Our nationality may be British, but our culture is European. Europe will always be there, which is why it is legitimate and right to say that we must be in Europe but not ruled by Europe.
We have to ask ourselves, "Can we go on like this?" We have to say honestly that, if we cannot get our European partners to abandon a project on which they have been embarked these 30 or even 40 years, and in fairness to everyone, we must ultimately have a relationship with which we feel comfortable. There is a great deal more that I could say, and I hope that there will be occasions on which I can do so, but I am conscious that other hon. Members want to speak. We must face up to what we are about, and the Foreign Secretary did not begin to do that.

Ms Claire Ward: First, I apologise to the House for being unable to remain for the winding-up speeches.
Let me take up the point made by the hon. Member for Teignbridge (Mr. Nicholls) about the referendum in the 1970s. Unlike many hon. Members, I do not remember the great debate and the referendum on entry into what was then called the European Community. For me and many of my generation, Europe, and our co-operation with our European counterparts, has been very much part of our lives. We have studied European languages and adopted many aspects of European culture. We frequently travel to Europe and we have friendships with people in other European states. I stress, however, that my pro-European stance in no way suggests any less support for my own nation state and for the right of its people to determine the best future for this country.
Many hon. Members on both sides of the House have found it difficult to be both a citizen of a nation state and a European. The two have not sat comfortably together, but the advantage of being a full, proactive member of the European Union is that we maximise the benefits of our membership through co-operation. We enhance the opportunities for trade, and we increase rather than restrict competition. We agree on changes where they are in our interests. In our dealings and relationship with Europe, that fundamental principle must always remain: we agree where that is in the interests of Britain and its people. What can be wrong with that?
We have heard a lot of scare stories lately. There has been a lot of scaremongering on the euro and on tax harmonisation. I accept that fear is often the result of change or of the unknown. I can accept that many people find it difficult to believe that those who have proposed the euro, and those who will enter it next year, can be acting in the interests of more than their own nation states. Such panic and scaremongering is certainly not in the interests of Britain. A sensible, well-informed debate weighing all the pros and cons of the euro certainly would be. The euro is in the interests of Britain and of business.
Although I have the utmost respect for my hon. Friend the Member for Nottingham, South (Mr. Simpson)—and, as a colleague and fellow team player in the all-party parliamentary football group, I have no wish to offend

him, because he may make sure that I end up with a few bruises in the next game—I do not completely agree with him.
Let us consider the example of the United States. My hon. Friend's arguments were clearly thought out and well constructed, but the history and culture of the United States are different from the history and culture of the European Union. What we create in the European Union, with Britain a part of it, will be unique. We will be able to look to America to consider some of the issues that my hon. Friend rightly raised, but we should do so for information and knowledge only.
Last Monday, more than 100 business leaders signed a statement in the Financial Times, saying that Britain
should aim to join the single currency as soon as the conditions for successful entry are in place".
In their view, that is likely to be soon after economic and monetary union is established. Since the publication of the business statement, a further 150 business people, from companies large and small, have rushed to sign up.
That is perfectly understandable. Those business leaders signed in personal capacities, but they include the chairmen and chief executive officers of more than 20 FTSE 100 companies, as well as many small and medium businesses and entrepreneurs from every region of Britain.
Companies such as Marks and Spencer are making the necessary changes to their business and to their tills to adapt to the euro, because they believe that the euro will be part of Britain's dealings with the EU. A company in my constituency, which supplies electronic health equipment to health services in this country and in Europe, has decided—much to my regret—to close a significant part of its operation and move to Europe. It will be dealing in euros to a much greater degree and believes that it should be based in one of the member states.
Some 63 per cent. of businesses say that it is in their best interests that we join the single currency as soon as possible or after the next general election. My right hon. Friends the Prime Minister and the Chancellor have made it clear that, although we support the principle of the single currency, such fundamental change must come only with the support of the people of this country and at a time that is appropriate for Britain. That is a clear position, which I fully support.
Business in this country needs the euro. Almost one in four firms doing business with Europe have been asked to deal in the euro from January 1999. If we do not take a serious interest in the euro, we will be left behind. Some 65 per cent. of United Kingdom exporters want a single currency in the EU, and we will continue to let them down if we do not take a clear view on movement towards the euro.
The right hon. and learned Member for Folkestone and Hythe (Mr. Howard) suggested that there is one all powerful person in the EU—the German Finance Minister. He also suggested that if the German Finance Minister makes a statement, the rest of us should be very concerned that it represents a development of the policy of the EU. Are we to believe that, when the German Finance Minister states a view, we should assume that it is a fait accompli? That must be absolute nonsense. We should bring some reality to our discussions.
The German Finance Minister is but one member of the German Government, and the German Government are but one member of a 15-state body. They will not get their own way; of that, I am absolutely confident. There is no sense in greater harmonisation of tax. It would not benefit Britain. As the overriding principle must be that we adopt changes only if they are in Britain's interests, there should be no great move towards the harmonisation of taxation.
It is nonsense to suggest that joining the euro will inevitably lead to tax harmonisation. For a start, we would be absolutely mad to allow harmonisation, because we know that it would result in much higher costs for all. We do not have to accept such moves. That is the great advantage and the purpose of having a national veto. Any change to EU taxation policy must be agreed unanimously by member states. Britain has the right to veto any proposals that it opposes. Furthermore, the abolition of the national veto in any area of policy requires a treaty change, which must first be agreed unanimously. Britain's right to veto any proposed EU taxation policy cannot be removed without our consent. So long as we oppose the harmonisation of taxation, we will remain without it.
Our future is in Europe. We should be a part of it and lead it, and not be led by it. We must not stand on the sidelines shouting advice, but should be on the pitch scoring the goals and winning for our team. My right hon. Friend the Foreign Secretary has made it clear that he wants to lead our nation in our discussions with Europe. The policy that we are pursuing is the right one for Britain, and I hope that we shall continue to pursue it.

Mr. Crispin Blunt: It is a great pleasure to follow the hon. Member for Watford (Ms Ward). Soon after she and I arrived in the House, we were on a radio show together. It was a great pleasure to take part in that show with her. She has helped to illustrate some of the points that I want to make.
At the beginning of the debate, the Foreign Secretary said that the British people should be treated like adults. We have had some extremely adult and intelligent contributions to the debate, and there has been some terrific analysis. I commend the hon. Members for Crewe and Nantwich (Mrs. Dunwoody) and for Nottingham, South (Mr. Simpson) for their contributions and analysis, which I thoroughly enjoyed. I experienced the usual frustration when I listened to the Foreign Secretary, and I felt the same frustration when I heard the hon. Member for Watford loyally follow his line.
The problem is a lack of honesty in the debate about Europe. We are not treated as adults. The Foreign Secretary and the hon. Member for Watford sought to escape behind statements about the current legal position on what measures can be imposed on the United Kingdom. We heard a terrific analysis from my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), with his experience as a former Minister for Europe, of how the United Kingdom, under a Conservative Government who were prepared to be isolated in Europe—to some extent they had to make a virtue of it after 18 years in government—was out-manoeuvred. Changes were made so that policies were decided by qualified majority voting, and we no longer had a veto. Judgments of the European Court of Justice went against the United Kingdom. The court

referred to the introduction to the treaty of Rome, and said that it had made its judgment in the interests of integration.
It is frustrating to hear the Foreign Secretary hide behind the current legal position, when the tide of opinion about the future development of the European Union will overwhelm that legal position in the near or medium-term future. The logic of the Government's position on negotiation leaves them even weaker. We were dug out of our position after years of having to battle against changes to the rules. There was disappointment in the Conservative party because of the bad faith shown by the European Union when it changed the rules on which decisions were based.
The Government's problem is that they are committed to the language of constructive and positive engagement in Europe. However, 18 months after coming into office, they are already talking the language of isolation on tax harmonisation.
I object to the conduct of the European debate. This morning, I listened to the Chancellor of the Exchequer talking about the social chapter. He said, "We were told the social chapter would lose us 500,000 jobs. Well, that hasn't happened, so it is all right." That is a trite way of dealing with the issue. The social chapter is a mechanism for the introduction of social regulation in the future. We have no idea what laws, regulations and directives will be introduced through the social chapter in the years to come, because we have given away the UK's capacity to prevent their introduction.
The Secretary of State for Trade and Industry is slugging it out in Europe and trying to find a suitable compromise, so that he can avoid using the veto to prevent the introduction of measures that we do not like. That is precisely the position that the Conservative Government were in on other areas of policy. We have a hideous sense of deja vu. We watched the Government approach Europe with enthusiasm in 1997, but 18 months later we see that their attitudes have started to change as they come face to face with the problem of defending our national interests and the natural British position, which is the same whether under a Labour or a Conservative Government. Their language is beginning to change.
The British Government put at the top of their list of priorities the timetable for enlargement. The Foreign Secretary joined the Foreign Ministers of the applicant countries. He was the only senior Foreign Minister at that meeting. He did not find time to join his colleagues in the European Union at the first Foreign Ministers' meeting under the Austrian presidency—but never mind. That shows where the British Government's priority lies. The Government have supposedly created credibility, but under the British and the Austrian presidency the date for enlargement has changed—from 2003, which Commission officials were talking about, to 2005. In private, Austrian politicians say that it will be 2015 before enlargement takes place. The Polish President has accused the European Union of bad faith and of creating myths to prevent Polish entry to the EU. In Britain, enlargement—widening the European Union—is our main interest but we are seeing it disappear over the horizon. The timetable seems to have slipped by almost exactly five years.
Earlier, I asked the Foreign Secretary whether he agreed with Hans Tietmeyer about the inevitability of taxation as a method of control in Europe following the introduction of a single currency. The Foreign Secretary said that he disagreed with Hans Tietmeyer, but who are we to believe? Are we to believe a central banker who has been in the finance business throughout his career—a distinguished career—or are we to accept the judgment of a Foreign Secretary who, like his party, has flip-flopped over the issue of European Union membership throughout his own career? The Foreign Secretary, at this stage in his career, is trying to bring about a wave of Euro-enthusiasm, but I predict that the position may well change if the Government fail to engage in economic and monetary union, as its consequences become increasingly apparent.
The hon. Member for Crewe and Nantwich delivered an amusing aside about the way in which socialist European documents had been drafted. There is an example in "The European Way". We now see that the British Government are trying to interpret matters in a certain way. There is reference to further measures to be taken to "avoid harmful tax competition". The Prime Minister has told us that tax competition is terrific, because it drives taxes down, and encourages tax regimes in the European Union to compete with each other. However, I understand that Mr. Lafontaine and Mr. Strauss-Kahn think that tax competition is harmful, and that tax harmonisation is required for that reason. Let us see who will win the argument.
The Government know perfectly well in what direction the European Union is heading. They cannot and should not pretend that the legal position as provided by the treaties will not change in the years to come. We have seen the result of their attitude. Already, after 18 months, they are isolated from their main socialist partners in Europe. They are having to rely on the conservative party in Spain to be an ally, and to try to protect the British interest.
My right hon. Friend the Member for Haltemprice and Howden said that it was worth paying the price for Britain to have a key role in Europe, enabling it to pull the Europeans back from the brink and to act as a control, vetoing further changes in the European Union. My right hon. Friend has an appetite for a scrap. Perhaps he envisages becoming Minister for Europe again, and having to take part in the process. That would, of course, be in the interests of the United Kingdom.
According to my observations of Britain's role in the European Union, the problem is about the price that we will pay—isolation—for trying to defend the British interest. Another price that we will pay is the reputation that we have won among our partners. We have always been seen as the "drag anchor", but that will no longer be worth the candle. We must ask whether we want to continue with the current process, or to lift the drag anchor, go full tilt into Europe and become positive contributors to Europe in an honest way, accepting the implications for the politics of the nation state. If we do that, we shall have to accept that there will be a new polity at the European level, and that we should think about building democratic European institutions around the euro. That is the choice that we face, but the Government are still not facing it.

Miss Anne McIntosh: I welcome the debate. I recognise that the European Union now permeates every aspect of domestic as well as foreign policy. I have a particular interest in transport, and I note that the Amsterdam treaty will extend co-decisions to transport matters. There will be exceptions in regard to competition rules and negotiations with third countries. Can the Minister explain the Government's position on state aid? Will the Government press for the ending of any further state aid, especially for airlines—Air France, Iberia, Olympic Airways and a catalogue of other carriers that continue to enjoy state aid?
Ports also enjoy state funding in certain member countries. Horticulture even makes possible the provision of cheap energy, particularly in one member state. Pork production is currently enjoying a subsidy in France and Germany. Government intervention would be very welcome.
The highlight of 1999 will be the revision of structural funds, and the balancing of those receiving such funds with applicant countries. It is generally agreed that the population level in respect of receipt of structural funds will be lowered. The impact on the United Kingdom and, particularly, on my constituency will be substantial. The Vale of York enjoys farm subsidies on a generous scale, Konver funding to train those with defence industry skills for civilian employment, 5b funding for poor farming areas in the hills and general training funds under objective 3.
The hon. Member for Nottingham, South (Mr. Simpson) struck a chord. Not only will his area suffer job losses through the loss in the defence industry; other areas, such as Chelmsford, will suffer heavy loss as well.
The objectives are being reduced from 7 to 3 and the Community initiatives such as Konver are set to disappear, but it is not clear what will replace them. I am a little concerned that responsibility for the negotiations is being shared between two Departments: the Department of Trade and Industry and the Ministry of Agriculture, Fisheries and Food. We need to ensure a co-ordinated approach in those negotiations.
The length of the transitional period for the various programmes is not yet clear. Whether other member states will agree to set key criteria as a percentage of gross domestic product, rather than just unemployment, which would penalise us, is not yet known. Some guidance on those negotiations would be helpful.
The Department of Trade and Industry is minded to identify "pockets of rural deprivation". Again, it would be helpful to have more details. I accept that we are in the middle of a farming crisis that is unprecedented in my lifetime, affecting every sector of farming. The loss of income from subsidies will be compensated for by direct payments to farmers under common agricultural policy reform, where appropriate, and by compensation for environmentally friendly schemes.
Rural development is a theme that will loom large, bearing in mind the impact that the farming community has on the whole rural economy, including contributing to market towns and local prosperity. I hope that, in their regulations, the Government will bear in mind the impact that the reform of CAP and structural funds will have on areas such as North Yorkshire. Traditionally, farming in


that area attracts low incomes, increasing the difficulty of finding homes for farm workers; they also face travelling further to work.
Agenda 2000 is a top priority for 1999. With the agreement of our European partners, the Government have set a deadline of March. I am sure that the Minister will appreciate that the European Parliament has agreed First Reading and, as the Commission refused to support a number of key amendments, the reports have been referred back to the relevant committee. The European Parliament will find it hard to meet the March 1999 deadline.
Clearly, that timetable has implications for the timetable for enlargement. I welcome moves towards enlargement, particularly for the former communist countries and Baltic states. Earlier in the week, I raised the threat of higher duties on pork with the Minister of State, Foreign and Commonwealth Office. I wonder whether she has had time to examine that matter and to find out whether it is true that the Czechs, Poles and Hungarians are threatening to break the Europe agreement. That would be worrying. I hope that the Government will do everything in their power to prevent such a move.
A particular interest of mine and, I am sure, of many others is duty on wines, beers and spirits. Duty-paid goods and their import for other than private, individual use is becoming a huge embarrassment to the Government. Bootlegging not only denies the Treasury of income, but damages the trade and employment opportunities of our wine merchants, brewers and distillers. That is unacceptable.
Rather than increase the number of Customs and Excise agents to apprehend culprits, it would be far better to lower the duty that is paid in this country and to raise the level of tax earned in that way. Better still, does the Minister think that she can persuade her European partners such as France, Spain, Belgium and Greece to raise the duty charged on their home-produced wines, beers and spirits? So much for tax harmonisation.
Duty free sales are scheduled to stop on 30 June 1999. Mario Monti, the commissioner responsible, claims that duty free sales have no future in a single market. I entirely agree—if the single market were complete, there would be no place for duty free sales.
When there is no harmonised rate of tax and duty charged, nor any prospect of harmonisation, with rates varying from 3 per cent. in one country to 33 per cent. in another, there are strong grounds for a reprieve, allowing duty free sales to continue for the foreseeable future. The outlook in that regard is bleak. The Commission has announced that the present rules on duty free will apply to duty free sales after 1 July 1999, leading to the bizarre situation of a bottle of whisky attracting different prices on the same route from, say, London to Corfu, depending on which country's airspace the plane is flying in and on the duty charged in that airspace. That is nonsense and I hope that the Government will help to deal with it.
The European Union continues to hold many challenges for the Government and for our relationship with our EU partners. There is real scope for tax harmonisation, which the Foreign Secretary assured us would normally be within the national remit alone. I believe that the scope lies in social security taxation. The extremely high rate charged in some EU countries amounts to a tax on jobs.
If our partners really wanted to create an employment strategy for Europe, they would amend their social security provisions. Businesses, not Governments, create jobs, but Governments do tempt businesses to create more jobs by lowering social costs. I urge them to do so.
The Vienna summit will address a number of those issues, including employment guidelines, the financial perspective and trans-European networks. I hope that the Government can rise to and meet the challenge.

Mr. Oliver Letwin: I want to make just two points in what is unremarkably—those of us who have attended many of these debates know the familiar pattern—a very thinly attended House. That is despite the fact that what we are debating is probably the most important issue to face this country, not just at present but for 300-odd years. Such is the nature of parliamentary democracy.
I want to comment on the character of the debate and the character of the Government in relation to the debate. The Government pride themselves on being modern. That is probably the single greatest thing on which they pride themselves. Yet, in an odd way, in this, the most important of all the debates facing the Government in the coming years, they are very ancient rather than very modern. They are out of date, not with the trend. That is because, unlike most hon. Members who have contributed to the debate—probably in private and unknown to the greater public—the Government have failed to recognise the fact that, as has been alluded to by many of my hon. Friends and many Labour Members who have now departed, we are on the verge of a United States of Europe.
That is not something that the Government will be able to stop. They can decide whether or not to be part of it, or rather, they can put that choice to the British people, but they cannot stop our partners moving in that direction. It would be a vain attempt and the Government will not make it. The Government are old fashioned in attempting to deny that that is the fact. It is also dishonest to attempt to deny that, but I shall dwell on it less because it is not an attack that would carry much weight. However, the fact of being old fashioned may, conceivably, strike a chord in the mind of some Ministers.
That is not my main point. I want to move the debate on a stage. I am bored with the period of prophecy. The period of prophecy is over. We know the facts and we know what is happening. We have a decision to make. The remarkable thing is that, because for so long—I regret that this has occurred within my party and firmly betwixt my party and others—we have debated the question of prophecy, we have forgotten to debate what decision we want to make. As one of my hon. Friends pointed out, the rhythm of the dialectic has been that we start by hearing that something will never happen and that it will be resisted to the ultimate, and then we hear that it is inevitable. In that rhythm of dialectic, there is no discussion of whether it is a good or bad thing. As a nation, that is what we now have to face. We have to confront the question to which we were brought face to face by my hon. Friend the Member for Reigate (Mr. Blunt), which is whether we think that the United States of Europe is something to which we want to belong.
I do not suppose that, in seven minutes, I can give the final answer to that question, but I hope that I might prod those few hon. Members in the Chamber, and those perhaps two or three recondite journalists who occasionally read our debates in their spare evening hours, into thinking about their response to the question. It is a poor outlook for the country if we do not have a response. It is a very poor prospect for the United Kingdom if those engaged in the debate in Parliament have not yet even begun to consider the question—which way the decision should be made—and no arguments are heard from either side of the House.
For myself, having thought about the matter a good deal—although not well enough yet—there are really two strands of argument that persuade me one way rather than the other in deciding whether we should want to join the United States of Europe, which will come about. The first is a negative type of argument, and the second is a positive one. The negative type of argument is that I think that there is something characteristically weak about the case for a United States of Europe. I do not mean there is not a case; there manifestly is a case. We have to face that fact.
There is a vision, which can best be described as a geopolitical vision of a world consisting of large players who rule the roost and of tiny players who are caught in forces that they cannot control. I hope that the Minister will forgive me if I describe that as the Chatham house or Foreign Office version. It has been the doctrine of the Foreign and Commonwealth Office for, roughly speaking, 400 years, and of its predecessors.

Mr. David Heath: The Cecils.

Mr. Letwin: Indeed, of every Cecil—the vision goes back a very long way in our history. Palmerston was perhaps its greatest exponent, but it is a very long-running theme.
The theory and reality of the United States of Europe are based on the vision, and that theory and reality are meant to convey to Europe its ability to be a great power—with the United States, possibly Japan, probably China, and, militarily, Russia. The case for being part of the United States of Europe is characteristically weak for a reason—which obviously needs vastly more expansion than I can give it today, and perhaps than I am capable of giving it—that perhaps resides in the strange historical fact that there is no evidence whatsoever that the citizens inhabiting great powers have led more pleasant, more fulfilled, culturally richer or economically more prosperous lives than citizens inhabiting very tiny powers.
Today and for most of my adult life, Switzerland has had the highest per capita gross domestic product, the strongest social cohesion and the greatest stability. It is a very tiny power, and almost gave up being a power at all. It is not a unique example; on the contrary. Throughout history and around the world, there have been large powers of which it has been unpleasant to be a citizen and small powers of which it has been pleasant to be one, and vice versa. I do not think that there is any evidence that being part of a great power or a small power is material to how its citizens live.
I do not personally—others may differ—buy the thesis that the fact that there will be a great power means that it will be to the advantage of the citizens of a small power to

join it. Therefore, I think that the geopolitical argument—which is meant to be the positive argument for joining the United States of Europe—is weak.I do not think that, by itself, that would be enough to decide to answer in the negative, because there is also a positive strand.
I should characterise the positive case as one of risk. The question that we have to ask ourselves as we face the choice of whether to obliterate the United Kingdom and absorb it within a United States of Europe is: what will be the character of the United States of Europe? Like other hon. Members, I do not have a crystal ball and cannot say for sure whether the United States of Europe will be a flourishing great power, beneficial to its citizens. However, there is a risk—I put it no higher than that; it is extremely important not to overstate it—and it is difficult for other people to challenge the existence of that risk. I describe it as the risk of the United States of Europe becoming an Ottoman empire.
There are three parts to that; I do not have time to elaborate them. The first is an institutional risk. Those who have the vision must admit that the United States of Europe will be created against the background of institutions that are at best immature. They will have some difficulty establishing themselves with the democratic legitimacy and universal acceptance that is required of a stable Government.
Secondly there are cultural problems. I do not rate them too highly. I am not saying that people of different cultures cannot get on in a single state. Belgium proves that they can, as do Switzerland and the United States. However, it is difficult. It is more difficult when the political, legal and other cultures are particularly rich and strong. The great glory of Europe is that the individual cultures of the nation states are stronger and richer than those in any other part of the world. That creates a particular difficulty in forging a United States of Europe.
Thirdly, there are economic and social risks, many of which have been mentioned this evening, including the creation of what one of my hon. Friends called an economic hot spot problem. I doubt that anyone can honestly deny that there is a danger that in the course of forging a United States of Europe, it would be difficult to produce sufficient economic and social homogeneity—or, in the jargon, cohesion—to avoid severe tension.
Because my argument is very weak, it seems to me the stronger. On those three grounds of institutional immaturity, real and profound cultural difference and serious economic tension, there is a risk that a United States of Europe would turn into an Ottoman empire rather than a successful parallel of the United States of America. I accept that some might think that unlikely, but I wonder whether even the Minister, who, we hear, is a great proponent, can argue that there is no risk. If there is a risk, we, the citizens of the state that beyond all other states has delivered to its citizens across hundreds of years economic, social and cultural stability and freedom under the rule of law, must ask: if the positive case for the United States of Europe from the point of view of the effect of the geopolitical argument on its citizens is weak, why take the risk? We ought to have the courage to admit that we face a question of whether to become part of a United States of Europe by sublimating and obliterating the United Kingdom. I am persuaded that we should not.
I do not mind which way people feel about the decision. I want us to stop debating as if there were a question of prophesy left to us and start the real debate, which is about that decision.

Mr. Howard Flight: This country will have to face reality in the next 15 months. There is a practical issue of a common European withholding tax. Europe desperately needs that from its own perspective. People do not pay tax on some interest. There is a need for a new source of taxation for transfer payments, which will need to be increased with a single currency.
This country's interests are clear. Harold Wilson and Governor Richardson of the Bank of England spotted that the interest equalisation tax in New York was driving away international deposits, enabling them to be taken in London. That prompted the growth of the European markets and the recovery of London as an international financial centre over the past 30 years.
The issue is not just about bonds, but about deposit taking, foreign exchange dealing, derivatives and all that goes with being the world's leading international banking centre. If a withholding tax is stopped, all that business will go to New York and Hong Kong. That is not a small matter. At least 100,000 of 600,000 jobs are at risk, and 3 or 4 per cent. of gross national product and 6 per cent. of our total exports are involved.
The Prime Minister has pledged to veto the proposal, but Europe has made it clear—rightly, from its perspective—that Britain is being arrogant. Europe wants the proposal to be implemented. I believe that the issue will boil over next year. Europe will not allow us to use our veto to stop its first major tax harmonisation programme. It will, as Schröder has warned, move to end the power of veto for individual countries. The reality will hit the hypocritical nonsense of pretending that Europe will do whatever we want it to in our interests.

Mr. Michael Trend: The Foreign Secretary patronisingly urged us all to behave like adults. That was as uncalled for as it was discourteous. We have heard many excellent speeches this evening. My hon. Friend the Member for Arundel and South Downs (Mr. Flight) has just made a brief but cogently argued point about the withholding tax, and the various speeches from hon. Members on both sides of the House have shown a that a great deal of thought is being given to the European question.
My hon. Friend the Member for West Dorset (Mr. Letwin) kept his eye on the rhythm of dialectic and the big questions that may one day be asked about the European Union. My hon. Friend the Member for Teignbridge (Mr. Nicholls), in a characteristically ebullient contribution, rightly said that if others want to create a supranational state, that is their business. At the moment, the evidence is strong that that is the direction in which many senior politicians in Europe want to go.
My hon. Friend the Member for Reigate (Mr. Blunt) also spoke on that theme. He described the overwhelming tide that is sweeping through the European argument, leading member states to ever closer integration. My hon. Friend the Member for Vale of York (Miss McIntosh) has

a different experience of the European Union from that of the rest of Conservative Members. She made an important and detailed speech, raising a number of questions that I am sure the Minister will want to follow up.
Especially welcome was the speech of my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis). He spoke from his experience in government of the difficult realities of negotiating in the European Union. The Government are now learning about those hard realities at first hand.
The contributions from Labour Members were 50:50. Of the four speeches, two were on message—one of them alarmingly so—whereas the other two expressed anxieties about the Government's position, although for different reasons: at least I think that they were different reasons. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) was right to say that we should explain the implications of where the European Union is going. We shall soon have that opportunity; in the referendum on the single currency, we shall be able to put the case to the country, as my hon. Friend the Member for West Dorset also said.
At the start of the debate, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) made a most telling contribution. He characterised the Government's position as one that faced in two directions at the same time—one for our European partners and the other for the domestic market. We have heard much this evening about the yawning gulf between the Government's rhetoric at home and what they endorse abroad.
We have heard how the Government are getting into difficulties on both fronts. They draw up carefully crafted positions but, especially on tax harmonisation, their proposals are being rejected both at home and abroad. Oskar Lafontaine will not put up with the British Government trying to have it both ways any more than will the Conservative party, the British press or the British public.
The Labour party hopes that the phrases in the Party of European Socialists' beloved document, "The New European Way", will also strike its different audiences—the left-of-centre Governments in Europe and the voters at home—differently. However, that did not seem to please the hon. Member for Nottingham, South (Mr. Simpson), for curious reasons entirely of his own. Many hon. Members have spoken about tax harmonisation, and it would be tedious and unnecessary to go over the issue again.
I have enjoyed one particular moment in the last few days, which makes the point, raised by my hon. Friend the Member for Reigate, that there is a great sense of deja vu about the Government's position. I had a fantasy—I do not pretend that it is the truth—about the scene in the Foreign Office yesterday. Ministers and their civil servants were trying to decide what to do after the Chancellor had come back, having been mugged at ECOFIN. How best were they to give the impression that the Foreign Office was not trying to lie low—although, of course, that was what it was trying to do?
No. 10, meanwhile, had been rampaging around the Government system, getting the line straight for Prime Minister's questions. A false move at the Foreign Office would spell disaster for somebody's career. "Shall we send the Foreign Secretary?" "No, Minister." "Should it


be a Minister of State, or another Front Bencher?" "No, Minister." "What shall we do?" "I know, Minister" said an experienced civil servant. "Let us send the Parliamentary Private Secretary." So it was that the hon. Member for Rotherham (Mr. MacShane)—I told him I was going to mention him—found himself on the radio yesterday, defending the Government single-handedly. No Minister was available, according to the rather sinister announcement.

The Minister of State, Foreign and Commonwealth Office (Ms Joyce Quin): Will the hon. Gentleman give way?

Mr. Trend: May I finish my fantasy? The hon. Member for Rotherham did his job very well. He read the headlines from the German newspapers—to, I suspect, a rather bemused audience—and seemed to suggest that the whole sorry business had been got up as a scare story by the British press. Various other Labour Members have suggested that. He seemed to say that they did these things better in Germany. He has a very promising career. However, the point of sending Parliamentary Private Secretaries is that they can sink or swim on their own without damaging the Government's reputation—although they may do tremendous damage to their own. However, the hon. Gentleman acquitted himself, and I hope his career is progressing nicely.

Ms Quin: I was interested to listen to the hon. Gentleman's fantasy—but it was just fantasy. If he had listened to other interviews yesterday, he would have heard me and other Ministers being interviewed. Sadly, a lot of my weekends seem to be disrupted by interviews on tax harmonisation and other European issues.

Mr. Trend: I have no reason to doubt the Minister, but I thought it curious that, a few hours before Prime Minister's questions, no Minister was available on the BBC lunchtime news on Radio 4. I may be wrong about those things.
The hon. Member for Rotherham, in a spirited interview, suggested that they do these things better on the continent. The evidence of the past six months does not suggest that. The informal summit was billed as an opportunity to debate subsidiarity—it had been prepared for months as a chance to investigate that subject closely. Only a few months ago, it was thought that the question of how to close the ever-growing gulf between the politicians and peoples of Europe was a matter of central importance.
The Foreign Secretary—like other senior European politicians—still airs the language of subsidiarity. He told us today that he was anxious that decisions should be taken as close as possible to the citizen, and we agree. However, what does that mean in practice? When the Foreign Secretary spoke to the Select Committee, it turned out to mean, mainly, a proposal for next year's vision statement for the European Union. If one has no plans for action, I suppose a vision statement will have to do.
Despite the continued use of such language, something fundamental has changed in the past few months. The Euro-land Governments—especially after the general

elections—picked up a new confidence. They could see that the euro would definitely be launched in 1999—that business was over, at least for the moment. The voices saying that it was best now to address the other side of the precarious balance between Governments and the governed were swept aside. Jacques Santer' s carefully crafted—and good—paper was put back in the filing cabinet.
Governments surged ahead with their next business. There has been greatly increased pressure in the past few weeks for further and quicker integration in taxation, employment, social affairs, internal policies, foreign policy, immigration and asylum policies. In recent weeks, I have talked to lots of senior European politicians—some of whom I have known for a considerable time. Many are, for the first time, saying in public what they actually believe.
I was told that subsidiarity and accountability would have to wait, as they were yesterday's arguments. The vital principles that we believe should be the very foundation of the European Union are being passed over by the architects of a much more tightly integrated Union.
Does anyone now seriously believe that the architects of the new Europe are building their ever more ambitious edifice on the secure foundations of popular understanding and consent? No. Bigger, not better, government is the order of the day and of tomorrow.
My hon. Friend the Member for Reigate spoke very well on enlargement. Great progress was hoped for on enlargement, and of course the Minister will tell us of meetings attended and timetables agreed to, but nobody involved in the application process believes any of that. With attention now so focused on deeper integration, European Union enlargement is being seriously delayed. European Commission officials were reported in The Guardian to be stating in private that the target date for the first wave of enlargement was slipping to after 2005.
One senior politician said to me, "The European Union has been holding out a carrot to us: we begin to move towards it and get close, but then we find that it has moved it on ahead of us again. How can we ever catch up if these are the rules of the game?"
The Foreign Secretary told the House in June that the speed at which applicant countries enter the European Union now depends entirely on the urgency with which they make the necessary reforms. That is not the view that is taken in Poland, the Czech Republic or Hungary. The amount of legislation that they, and especially Poland, have passed—hundreds of laws—beggars belief, but no amount of new laws will catch up with a European Union determined to make new, far-reaching legislation of its own.
As my right hon. and learned Friend the Member for Folkestone and Hythe said, the Government did not do the House the courtesy of telling us what had been discussed and agreed at the recent informal summit. A few days after it, however, I was again in continental Europe and met many people who were less retiring. They were happy enough to tell me what the Prime Minister had said. Their impression was that he meant that there had been a true reversal of the British position on defence. Some, I am afraid, cynically thought that that was because he was unable any longer to gain the limelight on economic matters, but others genuinely believed that there had been a fundamental shift in the British position.
Was that impression correct? Back at Westminster, Conservative Members asked the simple questions that we can ask in the ways that the House allows, and it soon became apparent that the Government were in a glorious muddle. The Secretary of State for Defence recently tried hard to explain at the Dispatch Box—I am charitably assuming that he had something coherent to explain—the complex theology that his officials had kindly developed to try to bring the Government's two faces on the matter back into better focus.
It is no longer possible for the Government to say one thing on the continent and another here and pretend that they can keep the House out of the process. The Government are going to Vienna in a muddle of their own making. There is a muddle on taxation, on defence, on enlargement, on reform of the European Union institutions, on internal matters, on subsidiarity and on accountability.
If the Foreign Secretary hopes that other left-of-centre European politicians will provide him with a welcome break from his problems back home, let me remind him once more of what his Euro-allies have been saying recently.
The German Chancellor expressed support for an "ever-integrated Europe". The German Foreign Minister said that turning the EU into an entity under international law, with a common constitution, was
the decisive task of our time".
Our friend Oskar Lafontaine said:
It is necessary to harmonise tax policy
and the Austrian Finance Minister agreed. He said:
The single currency will speed up the need for tax harmonisation.
On the veto, good old Oskar was unequivocal. He said:
I believe the unanimity rule cannot be maintained.
The French Finance Minister said:
Either you want fiscal harmonisation or you don't. These are all matters that should be subject to majority voting.
The German Foreign Minister said:
If it is going to turn into a full union, then one day foreign and defence policy will also have to become community tasks.
We are told that sometimes those statesmen speak for themselves and sometimes for their Governments, but that is spin doctor nonsense. They are speaking their minds and we should note carefully what is in their minds, because their views expressed today—on the record or off the record, officially or unofficially—will surely appear on tomorrow's agenda.
The coming summit will be difficult for Britain. The Government should say more clearly where they stand on all the issues raised in the debate, because it is becoming increasingly clear that an agenda is emerging to which no British Government could subscribe. No amount of warm words about being at the heart of Europe, or boasting about playing it tough in the Councils of Europe, will work much longer. The electorate are getting wise to the Government's two faces. In the end, it is results that count.
In one way, I sympathise with the Government. Some press commentators have said that this Government's position is as bad as that of the previous Government. There is something in that, but there is also one big difference. The Conservatives tortured themselves on

European policy, but they did so on matters of principle. This Government have made their muddle not on the firm rock of principle, but on the shifting sands of propaganda and presentation. The big trouble with looking both ways at once is that, sooner or later, one fails to look in either direction with a steady eye and the inevitable accident occurs.

The Minister of State, Foreign and Commonwealth Office (Ms Joyce Quin): This is the first debate of this kind that I have taken part in since becoming a Minister in the Foreign and Commonwealth Office. However, I count myself as a veteran—perhaps happily, perhaps unhappily—of these debates, having taken part in many while in opposition, from the Back Benches and the Front Bench. One common aspect of the debates—not surprisingly, given the many issues with a European dimension—is that they are always wide ranging.
I begin with an apology on behalf of my right hon. Friend the Foreign Secretary who is not able to be in his place for the winding-up speeches because he has left to attend the British-French summit at St. Malo, which I shall also attend later. At that summit, many of the issues that have exercised hon. Members on both sides of the House today will be raised.
Many of the speeches in the debate contained effective calls for an informed debate on European issues and I echo those calls. Many of my hon. Friends, especially my hon. Friends the Members for Dunfermline, West (Ms Squire) and for Nottingham, South (Mr. Simpson), made the point about accurate information very tellingly. I join with those who have deplored the hysteria that has disfigured the debate about Europe, especially in the past few weeks, with irresponsible scare stories that alarm people unnecessarily. That does not do the people or democracy a service.
We want a debate in which people have access to information and we have a duty, which we take seriously, through our parliamentary proceedings to try to have as much discussion as possible on the issues. The speech by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) fuelled many of the scare stories, instead of considering them realistically and damping them down. I was surprised, if not astonished, when the right hon. and learned Gentleman was revealed as an arch-federalist of yesteryear in the extraordinary quotation from the magazine Crossbow in which he called for a united European defence policy. That was fascinating, and I have now been given the article so I will be able to read it from beginning to end.
One purpose of our debate is to review developments as we prepare for the European summit in Vienna. I hope that hon. Members will find it useful if I outline some of the topics that are likely to be raised on which we hope to make progress. A principal issue is Agenda 2000, on which the hon. Member for Vale of York (Miss McIntosh) spoke in detail and about which she asked me many detailed questions. I am happy to respond to some of those questions, but if I answered them all, I could deal only with her speech, and not with those of other hon. Members. Even then, I probably would not have enough time. I am happy to write to the hon. Lady if she feels that I have not dealt with any of her questions.
Some of the issues that the hon. Lady raised can, as she will know, be more appropriately dealt with by ministerial colleagues who attend specialist councils. One of the


down sides of being Minister for Europe is that I tend to be asked about every policy under the sun from wide-ranging issues about the future of Europe to the marketing of aubergines in the French Antilles. It is sometimes something of a challenge to answer all those points.
Agenda 2000 is an important package of issues that the EU must confront if it is to move the process of enlargement forward. The issues involved include the budget, agriculture and the structural funds. Much common ground has been established, particularly on structural funds and on the problems that should be addressed by objective 1, objective 2 and so on funding. None the less, a lot of work remains to be done, both on future EU financing and on common agricultural policy reform. Many comments have been made about the new German Government, but no one has said that that Government, much more than their predecessor, share our ideas on CAP reform. We hope to make important progress on that reform through the Agenda 2000 proposals.
As my right hon. Friend the Foreign Secretary pointed out, although the Commission's proposals on agriculture do not go as far as we would like, they would reduce support prices for a variety of products and would mean real gains for our consumers. My right hon. Friend quoted revealing figures on that. We believe that the Commission's proposals would allow us to work with like-minded Governments to increase pressure to make such reforms even better in future.
Many hon. Members have referred to the timetable of the Agenda 2000 negotiations. I agree that it is important to respect that timetable, particularly if we are to make a success of early enlargement. The hon. Member for Vale of York spoke of the European Parliament's deliberations on the timetable. There is some concern that the Parliament may not meet the deadline, as well as concern that the Council of Ministers might not. I urge the hon. Lady to try to pressure her colleagues in the European Parliament. If agreement is not reached in the present Parliament, we risk considerable delay because of the coming elections and the subsequent need for the Parliament to appoint new officers and set up new committees and procedures.
The hon. Lady expressed concern about the future of structural funds in her own part of the country, and she will know that delay to the timetable, with resulting delays in budgetary decisions, could affect structural fund allocations to areas in which many hon. Members on both sides of the House have an interest. Self interest gives us a strong reason to respect the timetable.
Many hon. Members referred to the importance of enlargement and I certainly strongly endorse those comments. However, I must point out to those on the Opposition Front Bench that, far from any weakening of our commitment, we are as firm a supporter of enlargement as ever. We were proud to support and launch the enlargement process during our presidency.
The hon. Member for Somerton and Frome (Mr. Heath) urged us to be inclusive in our approach, and we most certainly are. We believe that the countries involved need

to be treated on their merits. Some of them have made dramatic progress, as has been pointed out, and that must be fully recognised.

Mr. Letwin: In that case, will the Minister confirm—as one of her colleagues, the Financial Secretary, did not do so in the European Standing Committee—that the Government will oppose the Commission's proposal that countries should have to enter both stage 1 and stage 2 of European monetary union before they can accede?

Ms Quin: Those are issues to be discussed with the applicant countries. I will certainly not lay down rules in advance of the accession negotiations. Indeed, I know from speaking to Ministers in the applicant countries that different countries view those issues differently.
We need to ensure that the European Union is in a good position to welcome those new countries. I think that it was my hon. Friend the Member for Wimbledon (Mr. Casale) who strongly argued that, although we are understandably asking applicants to accept many of the rules and arrangements that exist within the EU, at the same time we have a responsibility to organise ourselves to become more enlargement friendly.
One aspect of Agenda 2000 and the Commission's proposals that greatly concerns me and on which we are arguing against the Commission line, is that farmers in the new member countries should receive much less favourable compensation than those within existing EU countries. We have argued for compensation to existing farmers to be reduced progressively, so that we do not create such a two-tier system, which would unfairly discriminate against applicant countries.
Despite some of the claims made tonight about our rolling over and agreeing with everything that is put forward in Europe, I can assure the hon. Member for West Dorset (Mr. Letwin) and his hon. Friends that that is simply not the case. We are putting forward strong and distinctive views on many of the issues in the Agenda 2000 timetable. In no way are we simply sitting back and accepting what others propose.
If enlargement is to be inclusive, it also means that it should not create new boundaries further east. Referring to a point made by the hon. Member for Somerton and Frome, the European Union has a clear responsibility to look outwards. There are debates within the EU, and there are protectionist and anti-protectionist forces. We want to ensure that the EU operates openly, so that it helps the economic reform and progress that is being made in countries further east, as well as helping developing countries in the world market, particularly in the agricultural sector.

Mr. Flight: Is there any support from our fellow members of the EU for the position that the right hon. Lady has described on Agenda 2000 and enlargement?

Ms Quin: Yes, indeed. The pattern is mixed on the issues that I described, but a variety of members support our position and we have received support from the Commission itself on many of the agricultural issues. I do not feel at all defeatist as regards the issues that we are discussing, nor do I recognise the description of Britain's position or of Ministers' meetings that has been offered by some Members, in particular those on the Opposition


Benches. On most issues, we find ourselves working in partnership with our colleagues, not in isolation. There are issues on which decisions must be made by unanimity where it is theoretically possible to become isolated and end up voting against the rest. However, in practice, in the meetings that I have attended as a Foreign Office Minister acting as a Justice and Home Affairs Minister, in which almost all decisions are taken by unanimity, the pattern of agreement, support and alliances that we have been able to build up with our European Union partners is impressive.
Hon. Members referred to the importance of the European Union remaining firmly engaged with Russia, of doing what we can to support change there and of helping it in the immediate future. We have been trying to ascertain how much food aid and support is needed, although I must admit that we have been getting different versions of what those needs are. We also want to examine trading arrangements with Russia, and consider how EU programmes such as TACIS—technical aid to the Commonwealth of Independent States—can be refocused to make them more effective, especially in reshaping Russia's banking system and installing proper financial controls, the absence of which has caused many of its recent problems.

Mr. Letwin: I apologise for interrupting the Minister again—she has been exceptionally courteous. However, as one who has worked long and hard with TACIS, I have to tell her that, if she is suffering from the illusion that it will ever make the slightest difference to the Russian banking system, she really should talk to those who have worked on it, because there is not the slightest chance.

Ms Quin: I simply do not accept that, because I have been involved in discussions on how to take that work forward. However, I would not commend TACIS without reservations, because many British firms working within it have been frustrated by the slowness of procedures and the way in which payments are made. Those problems must be sorted out.
The right hon. Member for Haltemprice and Howden (Mr. Davis), a former Minister for Europe, took the Government to task over various issues, saying that we

had failed to achieve agreements with our partners. That struck me as odd coining the week after our success in the lifting of the beef ban. Some of what he presented as a complete failure, I would regard as a success, for example, our decision to sign the social chapter. It was always a matter of great regret to me that the Conservative Government refused to sign that or the social charter which preceded it, and were never prepared to make even a basic commitment to decent treatment for the people who work in the single European market.
Many hon. Members referred to tax harmonisation. I believe that the press articles of the past couple of weeks are scare stories, because nobody is proposing the harmonisation of income tax, which is one of the claims; nor is there a specific proposal to harmonise corporation tax. In the European Union, it is important not only to see what is happening within it, but to see the position of the European market within the Organisation for Economic Co-operation and Development and in the wider world. One of my European counterparts told me of her worry that, if there were moves to harmonise tax within the European Union, we would take our eye off the ball—the position of the EU within the world market. My hon. Friend the Member for Watford (Ms Ward) referred to the need for us to be competitive in both the world market and the EU market. My right hon. Friend the Chancellor has made it clear that the UK will not support any action that will damage competitiveness, or our employment creation policies in the UK. That is extremely important.
The speech of the hon. Member for Teignbridge (Mr. Nicholls) contained several references to "Corpus Juris". He said that he had read the treaty of Rome, but if he supplements his reading with the treaty of Amsterdam he will see that the articles—

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put

ESTIMATES

Motion made, and Question put forthwith pursuant to Standing Order No. 145 (Liaison Committee),

That this House agrees with the Report [16th November] of the Liaison Committee.—[Mr. Hill.]

Question agreed to.

London, Tilbury and Southend Railway

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hill.]

10 pm

Mr. John Cryer: I thank Madam Speaker for choosing this subject for tonight's debate. The London, Tilbury and Southend line was chosen for debate before, but, along with other business, fell prior to the Queen's Speech. I also thank the Minister for her presence in the Chamber this evening.
My involvement with the London, Tilbury and Southend railway as a passenger pre-dates my election as a Member of Parliament. Although my remarks refer to the railway that runs from Fenchurch Street to Shoeburyness, I am concerned mainly with what is called the Tilbury loop, which runs through Rainham station in my constituency and through two stations, Dagenham Dock and Purfleet, in neighbouring constituencies.
Since my election—or shortly thereafter—I began to receive complaints from my Rainham constituents about service on the LTS line. People came to my surgeries and wrote to and telephoned me. I express my appreciation of the time and effort that my constituents have expended contacting me and attending meetings of the Rainham rail users group, which I helped to establish when, following an avalanche of complaints, it became clear that collective action was necessary. I expected about 20 or 30 people to attend the group's first meeting in September, but in fact there were probably 80 or 90. The mood of the meeting was so angry that, if an LTS Rail representative had been present, he or she would have had a pretty tough time.
I will give the House some idea of the feeling about LTS in my part of the country. An Essex radio station conducted a survey some time ago to discover the most unpopular man in Essex and east London. The managing director of LTS Rail, Ken Bird, finished second in that survey, pipped at the post by Saddam Hussein. That gives hon. Members some idea of how my constituents and, I suspect, people from neighbouring areas regard the LTS service.
That is hardly surprising in view of the correspondence that my constituents and I have received. In a letter last July, the managing director, Ken Bird, offered some fairly patronising comments. As part of an explanation as to why the service from Rainham is so poor, he wrote:
We offer a walk-on, walk-off non-reservable system".
He concluded:
It is now pleasing to be able to manage a retail venture that recognises that profit comes from giving customers what they want at a price they are willing to pay. We are not there yet, but give me another 18 months and judge us then.
People have been using LTS for three years since privatisation. It is fair to say that they have every right to judge the service now rather than waiting another 18 months. LTS has had quite enough time already. In any case, the Tilbury loop service, which runs through my constituency, has worsened since privatisation.
Many managers, including Ken Bird, ran the pre-privatisation British Rail service. They laid off many station staff before the sell-off and, after privatisation, took on low-paid security guards, whom I see regularly at Fenchurch Street checking tickets and giving directions.
Just before privatisation British Rail spent £150 million on resignalling the line—an investment from which LTS clearly benefits.
A choice paragraph from one of the railway's leaflets states:
LTS Rail has now employed a number of key staff in order to improve customer service and the station environment.
To many of my constituents, such comments are pure propaganda, especially when considered against the fact that the work force fell from 686 in 1995–96 to 657 in 1996–97. I am convinced that that has led to the cuts in the Tilbury service. There have been cancelled trains, frequent delays and the early closure of the booking office at Rainham and other stations. The company is not prepared to employ sufficient staff to run the line successfully.
I shall give the Minister an example. Two years ago there were six trains running between 8 and 9 am from Rainham to Fenchurch Street. There are now just three trains: the 8.12, the 8.27 and the 8.48. Like many trains since privatisation, the 8.48 has been reduced from eight coaches to four, leading to such overcrowding that I wrote to the Health and Safety Executive to find out whether it could do anything about the problem.
The HSE wrote back saying that overcrowding was not a danger in itself, but if there was an accident, as was the case in Clapham, an overcrowded train would be likely to result in many more injuries to the passengers than a train that was not overcrowded. Because most of the trains on the Tilbury loop are the old slam-door trains, there are no suitable handles for passengers to hang on to when they have to stand to travel to work and home again.
Last year LTS Rail failed in its obligation to run 98.5 per cent. of timetabled trains. It cancelled 1,500 trains, and 2,000 trains ran late. Nevertheless, Prism Rail, the parent company of LTS, has received a considerable amount of money from the taxpayers' pocket—not only the £150 million that went into resignalling, but £30 million from the franchising director in 1995–96, which will fall towards the end of the franchise in 2011 but is still a substantial sum. Passenger income for 1995–96 was £52 million and for 1996–97 it was £55 million. Revenue grant for the same years was £31 million and £24 million respectively. Large sums are going into LTS, but people are not seeing the benefits, and there is growing anger among my constituents.
I shall give some examples of constituents' experiences with LTS Rail. My hon. Friend is familiar with one case, about which I have corresponded with her. It involves a woman who was stranded at Barking late at night after a train broke down. Only five taxis were provided to get everyone home from a full train. The woman had to ring her mother to send a taxi to take her home at about 1 o'clock in the morning. My hon. Friend will recall that British Rail was obliged to get everybody to their destinations if a train broke down, using licensed taxis or buses. It seems from that case that LTS is not meeting its responsibilities.
Another constituent writes to me regularly about the problems on LTS. On 18 November she wrote detailing all the delays and problems that she had experienced during that month. On six days during the first half of November there were problems including late trains, cancelled trains and locked carriages, leading to ever greater overcrowding and so on.
A constituent writes regularly with the outstanding excuses used by LTS. The corker was the announcement that
the delayed 7.55 am will not stop at Rainham due to the train already being heavily overcrowded.
In fact, when the train came through the station it was almost empty and—this is the telling point—it got to Fenchurch Street on time. Perhaps that had something to do with the fact that it did not stop at Rainham station. It meant that the railway could fulfil its obligations under the regulatory framework.
There has been investment in the railway, but it has gone on the main line—most was by Railtrack—in rail renewal. There has been minimal investment on the Tilbury loop. Stations are miserable and often deserted because there are not enough staff. The railway is extremely badly run and there is no sign of investment in the pipeline.
The result is fear among my constituents that part of the Tilbury loop could be run down to the point where it might face closure. The three stations—Rainham, Dagenham Dock and Purfleet—are always cited when people come to me to express that fear. I met Ken Bird last week and he assured me that Rainham station would remain open. He pointed out that LTS was legally unable to close any stations or any section of line that it runs, because that is a matter for the franchising director.
I have written to the franchising director to ask for an assurance that those three stations and the rest of the line will remain open until the end of the current franchise, which is 2010–11. I look forward to receiving that assurance.
My view, which is not always shared by the Government, is that certain things are best run as publicly owned monopolies. The railway system is one area that should be publicly run, owned and accountable. People across the country have problems, some of which are worse than those experienced on LTS. If the enormous problems in Britain's rail network continue, my hon. Friend and other Ministers will have to think about that.
In the meantime, we must consider strengthening the regulatory framework to make sure, for instance, that LTS does not get away with the diminution in the service from Rainham to Fenchurch Street. LTS should have to provide the sort of service—or better service—than was provided before privatisation. We should return to the days when there were six trains between 8 o'clock and 9 o'clock in the morning from Rainham to Fenchurch Street, and those six trains should carry eight carriages.
The franchising director has allowed LTS to delay the introduction of new trains—despite all the money that is going from the taxpayer's pocket into LTS. The introduction of new trains to replace the old slam-door variety has been delayed by three years and they will not come into service until 2002. That is another example of the laxity of the regulatory framework, which is hardly surprising: it was introduced by the previous Government, who saw rail privatisation as a way of taking money out of the taxpayer's pocket and diverting it into the pockets of shareholders.
The great problem is that, in any privatisation—rail or any other—the people who run the railway ultimately have greater responsibility to shareholders than to anyone else. That is the crux of why there is such a system on LTS and on other railways.

The Minister for Transport in London (Ms Glenda Jackson): I congratulate my hon. Friend the Member for Hornchurch (Mr. Cryer) on securing the debate—twice. I also congratulate him on putting on the record so succinctly the concerns and the experiences—the bad experiences—of his constituents in respect of the service that they are receiving from the London, Tilbury and Southend railway.
The Government have made it clear that poor performance on our railways is unacceptable—it will not be tolerated. We expect train operators to run punctual and reliable services, and we expect Railtrack to meet its obligations to passengers, freight customers and taxpayers to maintain and develop the rail network in a manner that offers proper value for money.
Hon. Members—indeed the whole country—will be aware that all franchisees and Railtrack were summoned to a meeting last week with the Deputy Prime Minister, the Minister of Transport and me. As a result of that meeting, an action plan has been agreed to tackle performance problems across our railway network. Measures agreed include 800 new train drivers, 500 new vehicles, a joint hit squad to examine, identify and tackle the worst 50 black spots on our network, and a national troubleshooter team to tackle punctuality problems. We shall also introduce a new national passenger survey to find out what passengers really think about their rail services, and to help measure performance across the network.
That action plan is only a first step to delivering short-term improvements for passengers. We expect to see progressive, year-on-year improvements from the industry starting over the next 12 months. Next February, there will be a wider-ranging national railway summit to examine how to tackle medium to longer-term performance problems.
My hon. Friend spoke specifically and succinctly of the difficulties on the London, Tilbury and Southend line. I hope that he will be interested in a stroll down memory lane. When I first entered the House, the LTS line was dubbed the misery line. Hon. Members from both sides related horror stories of their constituents' experiences on a service that was going not from bad to worse, but from worse to execrable. That was before rail privatisation, and shows the previous Administration's failure to invest adequately in our national railway system.
However, it would be quite wrong to pretend that performance on the LTS line has not improved since that time. Some would say that it was impossible for it to get worse, and as my hon. Friend has detailed, it is by no means perfect. Despite the fact that 96 per cent. of LTS trains have arrived within five minutes of their scheduled time—a statistic that I regret to say many other train operators cannot match—problems with the renewal of overhead line equipment has caused cancellations, and season ticket holders are receiving discounts as a result. As we all know, what passengers and season ticket holders want more than discounts is certainty that the train will be there when they arrive at the station, and that it will reach its destination at the designated time.
My hon. Friend referred to his constituent's particularly harrowing experience. He wrote to me on this issue, and I promised that I would raise it with the Association of Train Operating Companies, which I meet regularly. Last


month, I reminded ATOC of the need for train operators to be mindful of their responsibility not to leave passengers stranded when services are disrupted. It is vital that train operators consider the personal security of their passengers during their whole journey, particularly at night, and, I would argue, even more particularly when the passenger is female.
Train operators are required to use all reasonable endeavours to deliver passengers to their destination station when services are disrupted. Although they are not formally obliged to do so, ATOC has assured me that train operators take passengers to their final destination when that is practicable or necessary for their personal security.
I raised this issue with the managing director of LTS, Mr. Bird, who said that he would speak directly to my hon. Friend. I trust that that is indeed what happened.
My hon. Friend expressed fears that there may be proposals to close the services that serve his constituency and what he referred to as the Tilbury loop. Services on the loop, as elsewhere on LTS, are protected by the passenger service requirement, which guarantees a minimum level of service.
I understand that, with the franchising director's agreement, LTS has rearranged the service pattern on the loop to increase frequency on the Ockendon branch, and to provide direct services to London. That has allowed LTS to run direct services to Chafford Hundred for the Lakeside shopping complex.
My hon. Friend referred to reductions in services on the line. I understand that the winter timetable has involved a cut of one train from both morning and afternoon peak times—a reduction from the summer timetable of, I believe, 12 to 11 trains in the morning and from 11 to 10 in the afternoon. I will, however, look into the specific issue that my hon. Friend raised.
Although I am pleased that more people are travelling by train, I accept that has resulted in serious overcrowding on certain London commuter services—certainly, as my hon. Friend pointed out, on LTS. All train operators have a general obligation to avoid excessive overcrowding, but more specific controls apply to London commuter services such as LTS at peak times.
Earlier this year, the franchising director required five London train operators to develop action plans to alleviate the serious overcrowding on their services. LTS has so far remained within the contractual limits set by the franchising director, but, like other operators, it has experienced an increase in passenger numbers over the last year. I expect the franchising director to ensure that, where network capacity allows, all operators of London commuter services take immediate action to reduce any severe overcrowding that may occur now or in the future.
We have made it clear that train operators' performance will be a key criterion when it comes to franchise renewal. Those who perform well will find that we are constructive partners. We are willing to renegotiate franchises, including franchise extensions, when that offers benefits to passengers and good value for money to the taxpayer; but our warning to train operators who perform poorly is simple and clear. Those who perform badly will not have a long-term future in the industry.
Last month, the franchising director announced a new package of benefits for LTS passengers. I was particularly pleased that it resulted from a voluntary renegotiation by the franchising director and Prism Rail of LTS's franchise plan commitments, rather than being recompense to passengers for poor performance. The package clearly signalled a commitment to responding to passengers' needs, and I hope that it was welcomed by them.
I accept that, as a result, some existing slam-door trains will not be replaced as soon as was originally agreed, although the majority will be replaced within a year with new trains already ordered by LTS. I know—and my hon. Friend raised the point this evening—that there is concern about the safety of older rolling stock. Slam-door rolling stock is not necessarily unsafe, but it has been criticised for its performance in certain types of accident. The Health and Safety Commission has recommended that all mark one stock should be withdrawn by 1 January 2003 unless it has been re-bodied or modified.
The new deal commits LTS to replacing its remaining slam-door stock progressively with modern sliding-door vehicles by the end of March 2002. Its fleet currently numbers 69 four-car units, of which 17 have sliding doors. By November 1999, 44 new four-car units will be in service, and by March 2002 a fleet of 72 four-car units will all have sliding doors.
The new deal offers a considerable package of additional benefits to LTS passengers to offset the delay in replacing the slam-door trains. LTS's passenger charter punctuality standard and trigger for season ticket discounts has been increased by 1 per cent., with immediate effect. Compensation for delays of 60 minutes or more has increased from 20 per cent. to 50 per cent. Contractual thresholds for cancellations and capacity have been tightened, so that enforcement action can be triggered at a lower level. Those thresholds will be further tightened in April 2000.
To help to meet the growing demand for commuter rail services into London, LTS has committed to extending its scheme for cheap early morning season tickets to more stations from May 1999, providing travel to Fenchurch Street at a discount of at least 20 per cent. A total of £2 million will be spent on service quality improvements, including real-time passenger information systems by the end of March 2000. A further £50,000 will be spent in each year until the end of the franchise on providing further staff coverage at stations. I hope that that fact affords some comfort to my hon. Friend the Member for Hornchurch.
Other welcome benefits included improvements to facilities for disabled passengers, including disabled toilets and boarding ramps at all 11 of LTS' main stations. LTS will seek accreditation for all its stations under my Department's secure stations scheme, and similar accreditation for car parks at its stations. Improved cycle storage facilities have been promised at a. further six stations.
The new deal committed LTS to improving transport integration between its services and other public transport services and commercial development, moving towards our vision of a railway that is integrated with other modes of transport and allows people to travel by public transport to the places that they want to reach. In particular, LTS has committed £700,000 to improving pedestrian access to the Lakeside shopping centre from Chafford Hundred


station. It has committed to building further links with bus services in the local area. It will work with Great Eastern railway to develop season tickets between London and Southend that can be used on either train operators' services.
On our plans for the future of passenger rail services, renationalisation—not a word that my hon. Friend the Member for Hornchurch uttered, but it is clearly still his dream—of the railways would be very expensive and cannot be a priority given the other demands on public expenditure. Therefore, our task is to improve the railways as we find them, not as we wish them to be.
We will introduce a new strategic rail authority to provide a clear, coherent and strategic programme for the development of the railways. The SRA will provide a better means of influencing the use of the significant amounts of public funds that we provide to the industry, to the benefit of passengers and taxpayers.
The Loyal Address on 24 November has now given us the go-ahead to publish a draft Bill to introduce the necessary legislation to establish the SRA. Given the extraordinary events that are taking place down the

corridor and the even more extraordinary events that are taking place in the official Opposition, legislation could come sooner, rather than later.
However soon we legislate, it will take at least 18 months to get the SRA up and running. That is why the Deputy Prime Minister announced at Blackpool the setting up of a shadow SRA. That will use existing organisations—the British Railways Board and Office of Passenger Rail Franchising—both of which will be under new leadership by next spring, when the new shadow authority will be up and running.
I acknowledge that not all the challenges that face the rail industry can be solved overnight. It is clear that, in many instances, the passenger and taxpayer are still not getting the best deal in the privatised railway; indeed, my hon. Friend the Member for Hornchurch gave us details of that fact. We are under no illusions about the scale of the challenge that we have set ourselves, but we are determined to work with the rail industry to achieve our goal.

Question put and agreed to

Adjourned accordingly at twenty-nine minutes past Ten o'clock